Zanepa v Kaivovo [1999] PGSC 30; SC623 (2 November 1999)

Unreported Supreme Court Decisions

SC623

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

SCA 51 OF 1999
BETWEEN: NAZEL WALLY ZANEPA - APPELLANT
AND: ELLISON KAIVOVO - FIRST RESPONDENT
AND: DEPT OF EAST NEW BRITAIN - SECOND RESPONDENT
AND: THE STATE - THIRD RESPONDENT

Waigani

Woods Injia Sawong JJ
24 August 1999
2 November 1999

EMPLOYMENT – Terms – Termination – measure of damages and entitlements – reasonable notice – Public Servant – Public Service (Management) Act – Employment Act.

Counsel

P Dowa for the Appellant

C Makail for the Respondents

29 October 1999

WOODS SAWONG JJ: The appellant is appealing against the judgement of Akuram J given in Mount Hagen on the 7^th May 1999 on a claim by the appellant for damages for wrongful termination of employment.

The claim was based on the termination of the appellant as the Provincial Town Planner in East New Britain in October 1994. The claim was for salary and entitlements during the period from October 1994 until June 1996 when the Plaintiff obtained new employment, although at a claimed reduced salary, as Provincial Town Planner in the Department of Western Highlands.

The trial judge disallowed the claim for reduced salary. For loss of salary the trial judge only allowed 4 weeks in lieu of notice based in accordance with the provision of section 33 of the Employment Act Chapter 373. The trial judge disallowed the claims for recreation leave entitlements, loss of POSF savings, furlough leave entitlements, loss of family car, loss of claim over a Government house. The trial judge assessed a sum for frustration and distress.

The grounds of appeal relate to each of the items of salary and entitlements claimed.

However there is an overall point to be considered namely the measure of damages for unlawful termination. The appellant was employed by the Department of East New Britain and was thus a Public Servant. There was no evidence that he had any written contract of employment which took him out of the ordinary law or gave him any fixed term of employment or any permanent employment. It must therefore be deemed to be a contract of service for an unspecified period of time and under the terms of section 33 of the Employment Act Chapter 373 a party to such a contract of service may give notice to the other party of his intention to terminate the contract and the length of such notice in the case of the appellant who had been in the employment for over 5 years was 4 weeks notice. The trial judge referred to the case of Ereman Ragi & The POSF Board v Maingu Unreported SC 459, and found that this period of notice was relevant in this case and assessed the damages on the basis of the 4 weeks salary in lieu of notice.

On the loss of reduced salary the trial judge found that the evidence before him did not show that his new position had any increased salary from the previous salary rather the figures showed his new salary was higher. However on the basis of the right to terminate on appropriate notice as referred to above then there can be no claim here. I find no errors in the trial judge’s consideration of this claim.

The loss of salary is covered by the reference to the Employment Act Section 33 above. The law is as stated in the Ereman Ragi & Anor v Maingu case above referred to and we find no reason to deviate from that. It is submitted that as a permanent public servant the appellant is in a different situation than persons covered by the Employment Act and has some sort of permanency by way of the Public Service Management Act. Whilst it may appear from Section 3(1)(b) of the Employment Act that public servants do not come under that Act because their employment comes under the Public Service (Management) Act, that Act does not then give them any more rights than under the Employment Act. What the Public Service Act gives is the right to air any grievance about their employment, to someone other than their immediate superior, but it does not take away the common law right to hire and fire, or the converse that the law does not force a reluctant employer to retain the services of an employee that it does not wish to continue relationships with. The Employment Act then comes in and gives an employee the minimum right to notice. We find that there is nothing in that Act which gives any rights or claims to permanency and thereby any consequent right to damages based on any other term than that referred to in the Employment Act. We therefore find there are no grounds to interfere with the principles propounded in the Ereman Ragi judgement and we therefore find no errors by the trial judge.

The claim for loss of recreational leave entitlements and POSF entitlements and furlough entitlements is covered by the ruling on the right to terminate under the Employment Act and we find no errors by the trial judge here.

We can find no basis for any entitlement for loss in relation to the opportunity to acquire a government house. This was merely an opportunity, if there was any subsisting agreement then that agreement would exist and give rights independent of any termination of employment. We find no errors in the trial judge’s ruling here.

The claim in relation to the motor vehicle has nothing to do with the termination of employment. The fact that the appellant left his motor vehicle in Rabaul was a matter independent of the employment and the subsequent loss was because of the failure of the appellant to protect his property and was through no negligence or wrong attributable to the respondents. We find no errors by the trial judge here.

We find no errors by the trial judge and we dismiss the appeal with costs.

INJIA J: In this appeal, the grounds of appeal raise questions of mixed law and fact for which leave to appeal is not required, and of fact alone for which leave is required. We granted leave on those grounds pertaining to fact alone: Supreme Court Act, S.14. We then proceeded to hear arguments on the merits of the appeal.

This is an appeal against the trial judge’s refusal to award damages for certain claims in respect of an action for wrongful dismissal brought by the Appellant against his former employer, the State (third respondent). The first respondent is the Administrator of the Department of East New Britain (second respondent). The second respondent is a department of the third respondent. Pursuant to provisions of the Wrongs (Miscellaneous Provisions) Act (Ch. No 297), the third respondent is vicariously liable for the wrongs committed by the first respondent in the course of his employment. The cause of action was founded on the first respondent’s failure to comply with certain disciplinary procedures prescribed by the Public Service (Management) Act 1995 (hereinafter abbreviated PS(M) Act), in effecting his dismissal from the public service. As liability was not in issue at the trial because the appellant obtained default judgment against the respondents, the trial before the National Court was on assessment of damages only.

The grounds of appeal are:

(a) His Honour fell in error in dismissing the Appellant’s claim for loss for reduced salary in the sum of K5,080.00 against the weight of evidence.

(b) His Honour fell in error in holding that the Plaintiff was only entitled to 4 weeks salary when the evidence was clear that the period of loss was clearly ascertainable.

(c) His Honour’s decision to dismiss the whole claim for loss in salary was harsh and oppressive in the circumstances.

(d) His Honour fell in error in dismissing the Plaintiff’s claim for loss in Recreation Leave Entitlements against the weight of evidence.

(e) His Honour fell in error in dismissing the claim for loss of POSF damages against the weight of evidence.

(f) His Honour fell in error in dismissing the Plaintiff’s claim for loss of Air Fares against the weight of evidence.

(g) His Honour fell in error in dismissing the Plaintiff’s claim for loss of Government House against the weight of evidence.

(h) His Honour fell in error in dismissing the Plaintiff’s claim for loss of the motor vehicle against the weight of evidence.

At the hearing, the appellant abandoned ground (f). Ground (c) we were told is not a separate ground on its own but a summary of all the remaining grounds of appeal. Ground (b) raises an important question of law: The issue is whether the Employment Act (Ch. No. 373) and in particular S. 34 (4) (d), applies to a permanent officer employed under the PS(M) Act. As the fate of ground (a), (c), (d) and (e) are dependent on the outcome of the legal issue in ground (b), they can be dealt with together with ground (b). Grounds (g) and (h) raise issues of remoteness of damage and can be dealt with separately.

The facts of the case are that prior to 11 March 1991, the appellant was employed as a permanent officer by the National Department of Lands and Physical Planning. He was released by that Department to join the Department of East New Britain (hereinafter abbreviated “DENB”). On 11 March 1991, the appellant was employed as the Provincial Town Planner by the DENB. The First Respondent was the person directly involved in the employment of the appellant. The Appellant’s employment by both the DENB and the National Department of Lands and Physical Planning was governed by the PS (M) Act. At all relevant times, he remained a permanent public servant.

On 28 October 1994, by letter dated same, the first respondent purported to terminate the appellant’s employment with DENB on disciplinary grounds. In the termination letter, the appellant’s employment with DENB was terminated and he was told to return to his substantive department, the Department of Lands and Physical Planning, to be re-deployed at Mt Hagen. When the appellant complained to the first respondent of proper disciplinary procedures not being followed in terminating him, on 16 March 1995, the first respondent laid disciplinary charges against the appellant and without receiving a reply to the charge from the appellant, he dismissed the appellant from the Public Service. Upon dismissal, he was paid K3,217.22 in termination entitlements.

On 10 May 1995, the appellant lodged an application for administrative review of the first respondent’s two decisions by the Public Services Commission (“PSC”) under S.18 of the PS(M) Act.

Whilst the PSC was still deliberating on the review, on 28 June 1996, the appellant was re-instated on his previous substantive position by his own department (Dept. of Lands and Physical Planning) and posted to its regional office at Mt Hagen. His salary on his substantive position was lower than his salary paid on his terminated position with DENBP.

Also whilst a decision on the review by the PSC was still pending, on 21 July 1998 the appellant filed a Writ in the National Court. The appellant’s main claims pleaded in the Writ were damages for loss of salary (including domestic market allowance and annual increments) for the period he was out of employment, loss of salary occasioned by reduced salary upon re-instatement on his old job, various leave entitlements, loss of POSF Savings, loss of family car and loss of opportunity to purchase a government house.

Although S.18(2) of the PS(M) Act requires the PSC to complete its review within 60 days from the date of lodgement of the application, for reasons unknown, the PSC published its findings and recommendation on 26 August 1998. This was more than 3 years after the review application was filed, some 2 years after the appellant was re-instated on his substantive position and 1 month after the Writ was filed. The PSC found the termination was unlawful and “recommended” to the first respondent that the termination decision dated 28 October 1994 be revoked, that the appellant be immediately re-instated to his substantive position and that the department effect full payment of all salaries and other entitlements he had lost to be calculated retrospective to 28 October 1994.

Leaving aside the claims for loss of family car and house, the claim for the other entitlements raised the issue: When a permanent officer of the public service is dismissed on disciplinary grounds, without opportunity to answer charges, for what period is he entitled to recover in damages, for future loss of salary income and other entitlements? The trial judge resolved the issue by resorting to the Employment Act. Section 34(4)(d) of that Act provides for 4 weeks notice of termination where an employee’s contract of service makes no provision for length of notice of termination and where the person has been employed for more than 5 years. Where such an employee is terminated without notice, he is paid 4 weeks salary in lieu of notice: See s.35(2). It was not disputed at the trial that the appellant was employed under a contract of employment which made no provision for notice of termination and that he had served the State for more than 5 years. The trial judge applied the principles in the Supreme Court decision of Ereman Ragi –v- Joseph Maingu Unreported Supreme Court judgment No. SC 457 (1994) and only allowed for money in lieu of 4 weeks notice. His Honour calculated the total amount payable at K1,035.22.

The passage in Ereman Ragi relied upon by the trial judge reads:

There is nothing in the law that states that a public servant or any other employees has any claim to life employment. Public servants and other employees remain liable to termination for cause or for retrenchment upon due notice being accorded to them. Upon dismissal without opportunity to answer charges the usual assessment is made on the normal wages of the employee over a reasonable period. Under the Employment Act Ch. 373 a reasonable period for a person who has been employed for 5 years or more is 4 weeks. This Act is stated to bind the State so even if it was argued that the Board is not a normal private employer because it is owned by the State, the employees still come under the Employment Act. The respondent did not have the benefit of any contract of employment which took him out of the general law”.

The principles in Ereman Ragi were clear and binding on the National Court. In my view, the trial judge did not err in applying the principles in Ereman Ragi because he was bound by that decision. The appellant’s counsel, Mr. Dowa concedes this point but goes on further to submit that the principles in Ereman Ragi should be overruled by this court because unlike in Ereman Ragi, the period in which the appellant was out of job and unable to earn his salary income is readily ascertainable. Mr. Dowa submits the first respondent’s blatant disregard for proper statutory disciplinary procedures for termination coupled with clear findings and recommendations from the PSC are special reasons enough to re-visit the principles in Ereman Ragi in so far as they apply to the present case. He submits the proper principles to be followed in assessing damages are to be found in the PS(M) Act and the common law. He submits the amounts claimed in the Writ were proved by the evidence placed before the trial judge and these should have been awarded by the trial judge. Mr Makail for the respondent submits the principles in Ereman Ragi are derived from a sound interpretation of the clear provisions of the Employment Act and were properly applied by the trial judge to the facts before him and these should not be disturbed.

The decision of the Supreme Court in Ereman Ragi is not binding on this Court. It is open to this Court, in an appropriate case, to overrule an earlier decision of the Supreme Court. A decision, of the Supreme Court to overrule its earlier decision should be done with caution and in a clear case; SC Ref No. 2 of 1992 [1992] PNGLR 336 at 350 -351; Public Prosecutor -v- John Aia of Mondo [1978] PNGLR 224 at 232; SC Ref No. 2 of 1982 Re. Upai Kunangel Amin SC 231 (1982) or in exceptional circumstances: MVIT -v- Reading [1988 - 89] PNGLR 608 at 610, Derbyshire -v- Tongia [1984] PNGLR 145.

In Ereman Ragi, the Supreme Court said the Employment Act and S.34(4)(d) in particular is a general law which applies to all employer-employee relationships including the State and its employees, for which there is no provision for notice of termination in a contract of employment. The Supreme Court had in mind only S.2 of the Employment Act. But S.3 (1)(b) which is also relevant was not considered by the Court. Sections 2 and 3 provide:

“2. Act binds the State

This Act binds the State and every authority and instrumentality of the State.

S.3 Application

(1) Except where it is specifically provided otherwise, this Act does not apply to or in relation to the employment of a person -

(b) under any other law in force in the country.”

Also relevant and not considered by the Supreme Court in Ereman Ragi is S.3 of the PS(M) Act which provides:

“This Act applies to and in relation to officers, in respect of officers and employers and all other persons employed or engaged under this Act, whether inside or outside Papua New Guinea.”

The Employment Act is a general statute which applies to all employer-employee relationships where there is no other statutory law governing a particular kind of employer-employee relationship. The PS(M) Act is a statutory law which provides for the employment of persons in the government public service. The PS (M) Act is a complete employment Code of its own. In my view, quite clearly the PS(M) Act is a law which comes within the meaning of S.3(1)(b) of the Employment Act. Further there is nothing in the Employment Act which specifically provides for provisions of the that Act to apply to a person employed under the PS(M) Act or vice versa. To the extent that the statement of the Supreme Court in Ereman Ragi applies to a public servant employed under the PS(M) Act, the Court clearly erred. I would differ from the opinion of the Court in that case and hold that by virtue of S.3(1)(b) of the Employment Act, the Employment Act has no application to a person employed under the PS(M) Act. With respect, I would also dissent from the view of my two brother judges on this point. I would overrule the principles in Ereman Ragi on this point.

Where a permanent officer of the Public Service is unfairly dismissed by the State in the exercise of its statutory power of dismissal for disciplinary reasons, ordinarily, “such dismissal may be susceptible to the public law remedy of judicial review where it is ultra vires, abuse of discretion or where the principles of procedural fairness have not been observed”: Chitty on Contracts 27th Edn. (1994) para 10-010 at p.524; R -v- Secretary of State for the Home Departments, ex p. Bengal [1985] Q.B. 554; Council of Civil Service Unions -v- Minister for the Civil Service [1985] 1 AC 374. The procedure to be followed is set out in Order 16 of our National Court Rules. Such dismissal may also give rise to an action at common law for wrongful dismissal but the weight of common law authority does not support this view: See cases cited in footnotes No. 57, 60 and 65 at paras. 10 – 099 and 010, at p.523 – 524 of Chitty on Contracts (supra).

In the present case, the appellant brought a common law action for wrongful dismissal. Because the competency of those proceedings was not an issue either at the trial or in this appeal, I do not wish to consider this issue. Under either cause of action however, the plaintiff is entitled to recover reasonable damages. Those damages should be assessed in accordance with relevant provisions of the PS(M) Act, and its Regulations and General Orders relating to salary and other entitlements and in accordance with established principles such as the appellants’ duty to mitigate damages.

For the foregoing reasons, I am of the view that the trial judge’s assessment of damages was based on the wrong Statute. I would allow the appeal under grounds (a) – (e) of the Notice of Appeal, quash the decision of the National Court and refer the matter back to the National Court for assessment of damages in accordance with this opinion. The damages to be assessed are in relation to total loss of salary, loss of salary occasioned by reduced salary on his old job and loss of POSF and other leave entitlements for the period between 28 October 1994 to 26 June 1996. I would dismiss grounds (g) and (h) of the Notice of Appeal in relation to loss of family car and loss of opportunity to purchase a government house because these losses were far too remote and not recoverable. Costs follow the event.

Order of the Court: Appeal Dismissed with Costs.

Lawyer for Appellant: Dowa Lawyers

Lawyer for the Respondents: Public Prosecutor