Gooneratne v Coastal Shipping Co. Pty Ltd [1999] PGSC 6; SC603 (30 April 1999)

Unreported Supreme Court Decisions

SC603

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

SCA NO. 35 OF 1995
BETWEEN: MR ANTHONY SHIRLEY GOONERATNE
APPELLANT
AND: COASTAL SHIPPING CO. PTY LTD
RESPONDENT

Waigani

Amet CJ Kapi DCJ Los J
9 April 1996
30 April 1999

APPEAL – Contract of Employment –whether induced by fraudulent misrepresentation.

Counsel

Appellant in person

W. Frizzell for the respondent

30 April 1999

AMET CJ KAPI DCJ LOS J: The appellant was employed as a ship engineer by the respondent in Rabaul persuant to a contract of employment executed on 23^rd April 1992 for a period of 32 months. He commenced work on 8^th June 1992. A few months after his commencement, he complained about certain conditions of work. In his letter dated 18^th December 1992 to the respondent, he wrote:

“Ref: my progress report of 3-12-92 and my letter dated 15.12.92 where you had taken full responsibility of overseeing the repairs of the machinery mech/Elec on board the vessel and item 3 part 1 of my letter dated 18-12-92 is an clear indication of the responsibilities you and your technical staff shoulder. Should this pully had came off the shaft, which would had if we ran the engine for a few more hours me and my staff would have lost our lives. This sort of working attitude by the company puts my profession and my life in to unnecessary risks which I do not want take. You have gone against the contract that has been agreed upon. You are hereby noticed to release me of my boundings by the contract and make arrangements to pay me my due money, and compensation and also my passage home immediate. Failing which I would have to seek advice as per my contract against my liking.”

The respondent replied promptly by accepting the letter of resignation in its letter of the same date. Subsequently there was dispute between the parties over entitlements by the appellant. This dispute reached as far as the involvement of the Department of Labour. It is not necessary to set out the details of this dispute for the purposes of the appeal before us. The appellant subsequently issued a writ of summons against the respondent in the National Court.

In his statement of claim, the appellant claims (1) rescission of the contract of employment with the respondent and (2) damages arising from fraudulent misrepresentation. The appellant claims rescission on the premise that the contract of employment is invalid and of no effect on the basis that he was induced to enter into it by fraudulent misrepresentation and claims damages that flow from such fraudulent misrepresentation. The appellant claims that the respondent fraudulently misrepresented the following matters:

(a) that the service hours were:

(i) Monday to Friday 7.00am to 5.00pm

(ii) Saturday 7.30am to 1.00pm

(b) the respondent shall provide for the use of the appellant during the term of employment free of charge a furnished one bedroom flat within the environs of his employment

(c) in calculating the remuneration package, the respondent had taken into consideration the requirements for overtime payment for hours worked beyond normal working hours.

(d) the terms of the contract was made in accordance with the laws of Papua New Guinea.

The respondent denied the claims and brought a cross-claim for loss of services of an engineer and expenses connected with replacing the appellant as a result of repudiating the contract before it ended.

In respect of claim for rescission of the contract, the trial judge concluded:

“The first order the Plaintiff seeks is ‘Decision’ (I think he really means Rescission) of the contract. As the Plaintiff has himself rescinded the contract by his letter dated 18^th December 1992 to the Defendant there is no contract for this court to rescind. Consequently no order is made in that regard.”

The trial judge held the view in this passage that the appellant rescinded or repudiated the contract by his letter dated 18^th December 1992. We will come back to determine the effect of this letter on the issue of resignation later in our judgment, but the point we wish to make here is that the appellant is entitled to rescind or repudiate the contract if he was induced to enter into it by fraudulent misrepresentation. The trial judge made the following findings in respect of fraudulent misrepresentation:

“From my consideration of the evidence on the issue of whether or not the Defendant was guilty of fraudulent misrepresentation, I am not convinced by the Plaintiff that the Defendant had fraudulently misrepresented to him regarding the hours of work, overtime and the total remuneration package. The fact that the Plaintiff has conceded that the Defendant has provided accommodation to him enforces that the representations were not fraudulent.

His allegation of fraud relating to the laws of Papua New Guinea is a misnomer. It has been based on a misconception of the intent and purpose of such a clause in the contract. The purpose and the intent of the ‘applicable law’ clause as it is commonly known is for the purposes of interpretation of the contract should any dispute arise. It is not for ensuring that the other party will adhere to all the laws of this country when performing the contract since there are (other) specific laws that deal with specific breaches of its provisions should such breaches arise in the course of performance of the contract. Carriage of dangerous cargo on a ship for instance is regulated by the Merchant Shipping Act and any action against the owner of the ship is taken under the Act and not under the contract in the way the Plaintiff seeks to do here.

In fact, from my perusal of the plaintiff’s letter of resignation dated 18^th December 1992 (Exh LL) and his earlier letters dated 30^th November 1992 and 18^th December 1992 respectively (Exh AA, HH & II) I cannot find any allegation of fraud against the Defendant regarding his hours of work and his remuneration package.

I am therefore not satisfied that the Defendant through its Managing Director, Mr Chow or if other servants or agents had a ‘wicked mind’ when it entered into the contract with the Plaintiff on the terms contained therein. I accordingly find that the representations made by the Defendant to the Plaintiff were not fraudulent.”

The trial judge dismissed both claims. The appellant filed numerous grounds of application for leave to appeal against the dismissal of the claim. They are drafted in layman terms and they do not specify with particularity the grounds relied upon which it is alleged that the decision was wrong (O 7 r 8 of the Supreme Court Rules). The appellant has not addressed the issues in any logical or clear manner in his written submissions. It would not be helpful to address the issues as he has presented them. We intend to address the main issues and consider whether the trial judge erred in dealing with those issues. The main issue raised by this appeal is whether the trial judge erred in reaching the conclusion that there was no fraudulent misrepresentation.

Of the four allegations of fraud relied on by the appellant, only three are worthy of consideration, namely, the representations made in respect of the hours of work, provision of one bedroom furnished flat free of charge and that the remuneration package takes into account work performed outside working hours.

In respect of provision of housing, the trial judge noted that the appellant conceded that accommodation was provided. The appellant in his ground of appeal (d) simply states that there was no necessity for the shore accommodation in view of the fact that he was forced to stay on board. Such a concession goes to explain why the appellant was not provided with on-shore accommodation. It does not go to show that there was any fraudulent misrepresentation on accommodation by the respondent.

In respect of hours of work, the evidence is clear that the appellant worked outside the normal working hours that were agreed to in the contract. The appellant submits that as he has worked outside of the working hours, the respondent misrepresented the working hours prior to entering into the contract. In our view, this submission has no merit. It ignores the terms of clause 5 (b) of the contract:

“(b) Notwithstanding anything else herein provided in sub-clause (a), the Employee shall be required to attend to his obligations hereunder at any additional times as the exigency of the business may require and further the Employee shall ensure that when he is not present to fulfil his duties that there is adequate supervision of obligations hereunder and further that the Employee shall not delegate his authority when it would be unreasonable or improper to do so.”

It is clear from this clause that the appellant was required to work outside normal hours as the exigency of the business required. The appellant would have been aware of the exigency of work as an engineer working on a boat. There can be no fraudulent misrepresentation in those circumstances.

In respect of the remuneration package, it was agreed in clause 6 (c) of the contract that there would be no overtime claim in that the remuneration package had taken into account allowance for working outside normal hours. It was up to the appellant to accept or reject this term of the contract. If he realised subsequently to the commencement of the contract that the remuneration package was not sufficient considering the number of hours he was working overtime, it was a matter he had to re-negotiate with the respondent and come to a new contract. There cannot be fraudulent misrepresentation in the circumstances.

We are satisfied that the trial judge did not err in reaching the conclusion that there was no fraudulent misrepresentation. It follows from this that the appellant was not entitled to rescind the contract either as at the date of the letter (18^th December 1992) or at the hearing in the Court below. Consequently, there can be no claim for damages based on fraudulent misrepresentation.

The position is that the contract of employment is valid. The statement of claim pleaded only damages arising from fraudulent misrepresentation. There is no alternative claim that the contract was valid and that there was a breach of the contract. We note from the decision of the trial judge that he considered whether or not there was any breach of the contract? It is not necessary to address this issue. By letter dated 18^th December 1992, the appellant purported to resign his position. In ground (c) of the grounds, the appellant alleges that he was not seeking to resign from the whole of the contract but simply to be released from the boundings of the contract. We have perused the letter and it is clear to us that this letter can only be construed as a resignation. The words “You are hereby noticed to release me of my boundings by the contract and make arrangements to pay me my due money, and compensation and also my passage home immediate” can only mean he was seeking to resign from the position under the contract. It is difficult to imagine a situation where a person does not intend to resign and asks to be paid “due money” and to be repatriated. We have concluded that this letter is a letter of resignation. The respondent correctly treated this letter as such and in its letter of the same date replied:

“Please be advised that your resignation is hereby accepted.

Your final pay together with your repatriation details will be advised to you as soon as flight details are confirmed.”

Our conclusion is consistent with the finding by the trial judge that the appellant in fact resigned. In the circumstances, he is not entitled to any benefit under the contract after the date of his resignation. He is only entitled to benefits up to the time of his resignation.

The respondent did not file a cross-appeal against the dismissal of the cross-claim.

In the result we dismiss the application for leave to appeal with costs to the respondent.

Appellant In Person

Lawyers for the Respondent: Warner Shand