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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA No. 28 of 2001
PAPUA NEW GUINEA BANKING CORPORATION (PNGBC)
Appellant
JEFF TOLE
Respondent
Waigani : Amet CJ, Sheehan & Kandakasi JJ
2002 : 25 February
27 September
APPEAL – Practice & Procedure – Allowing judgement to go in default – Taking issue on pleadings not raised before the National Court – Judgement for matters not pleaded with particulars – Appellant not at liberty to hack back at the lack of pleadings.
PRACTICE & PROCEDURE – Loss of salary or wages and other benefits amount to special damages and they ought to be pleaded with particulars – Failure to request for further and better particulars and take issue on pleadings entitles a judge to make awards on evidence presented despite lack of foundation in pleadings.
CONTRACT – Written contract of employment – Variation of not in accordance with terms of the contract – Termination in accordance with provisions of contract before agreed date of termination – No breach of contract and therefore no basis to award damages for breach of contract.
DAMAGES – Damages for breach of employment contract – Purported variation to terms of contract not effect in accordance with contract – Termination in accordance with contract – Dismissed employer under obligation to mitigate loss – Evidence of part-time employment – No evidence of level of income – No loss or damages suffered.
Papua New Guinean Cases Cited:
Nahau Rooney v. Forest Industries Council [1990] PNGLR 407.
Motor Vehicles Insurance (PNG) Trust v. John Etape [1995] PNGLR 214.
Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370.
Repas Waima v. Motor Vehicles Insurance Trust [1992] PNGLR 254.
Carmelita Mary Collins v. Motor Vehicles (PNG) Insurance Trust [1990] PNGLR 580.
Uma More v. University of Papua New Guinea [1985] PNGLR 401.
Mussau Timber Development Pty Ltd v. Santee Mangis & Ors N920.
Coecon Limited (Receiver/Manager Appointed) v. The National Fisheries Authority of Papua New Guinea (28/02/02) N2182.
Andrew Kwimberi of Paulus M Dowa Lawyers v. The State (27/03/98) SC545.
Yap v. Tan [1987] PNGLR 227.
Soso Tumu & Ors v. The State & Ors (28/02/02) N2190.
Peter Agilo v. Sir Mekere Morauta & Ors (28/02/02) N2102.
Other Cases Cited:
Ilkiw v. Samuel [1963] 2 All ER 879.
Pilato v. Metropolitan Water Sewerage and Drainage Board (1959) 76 WN (NSW) 364.
London Passenger Transport Board v Moscrop [1942] 1 All ER 9.
Gould and Birbeck and Bacon [1916] HCA 81; (1916) 22 CLR 490.
Hadkinson v. Hadkinson (1952) 2 ALL ER 567.
Counsel:
Ms. M. Solomon, for the Appellant.
Mr. T. Boboro, for the Respondent.
27 September 2002
AMET CJ : The Appellant Papua New Guinea Banking Corporation (PNGBC) appeals against a decision of the National Court awarding the Respondent a sum of K160, 834.66 as damages for wrongful dismissal.
The Respondent was employed under a written contract with the Appellant Bank as the Executive Manager, Lending Services for a period of three years commencing on 1 June 1998. On 11th October 1999 his contract of employment was terminated. In proceedings he instituted in the National Court, on 3 December 1999, the Court declared that the decision of the Appellant to terminate the contract of employment was null and void.
At the time of the termination of the contract on 11 October 1999, the Appellant paid the Respondent the sum of K144,953.43 as his
entitlements pursuant to Clause 28 (b) of the Contract of Employment. This amount represented the Respondent’s entitlements
for the period of twelve months. At the time of his termination, the Respondent had one year and eight months remaining under his
contract of employment.
The Respondent then commenced proceedings in the National Court for damages for unlawful termination, for the remaining eight months
under the Contract of Employment.
The Court upheld this claim as being correct in law, applying the ruling in Rooney v. Forest Industries Council of Papua New Guinea
and Another [1990] PNGLR 407 and concluded that since he was unlawfully dismissed, the Respondent is entitled to salaries and other entitlements or benefits for
the balance of his contract.
The Appellant contends that the learned trial judge erred in fact and law in ruling that the Respondent was entitled to judgment in his favour for the sum of K160,834.66, as special damages for wrongful dismissal from his contract of employment, because it had already paid the Respondent his contractual entitlements in the sum of K144, 953.45 upon his termination.
The Appellant further contends that the Respondent’s claim was only limited to general damages for distress and suffering, but concedes that the special damages award of K15,000.00 for distress and suffering can be affirmed. It says further that the award of K9,377.84 for interest on the principal sum be set aside but interest at 8 percent may be calculated from the date of filing of the writ on the sum of K15,000.00 special damages.
Clause 28 (b) of the Contract of Employment provides for termination of the contract by the bank in the following terms:
"In the event that the bank terminates this agreement for reasons other than unsatisfactory performance and/or cause then and in that event the officer will be entitled and the Bank shall pay to the officer, the salary and all other benefits pursuant to this Agreement, however described for the unexpired duration of this agreement or a maximum of twelve months whichever is lesser".
Whatever the precise reasons for the termination of employment of the Respondent by the Appellant does not matter because the National Court had declared that the termination was unlawful.
In my opinion, the termination clearly fell within the provisions of Clause 28 (b), that is that the termination was for reasons other than unsatisfactory performance and/or cause. The Bank was then obliged to pay the salary and all other benefits for the unexpired duration of the agreement or a maximum of twelve months whichever is the lesser.
The Appellant knowingly and correctly calculated the Respondent’s entitlements in the sum of K144,953.43, which it paid into the Respondent’s account on the date of the termination, 11 October 1999.
I consider that the case relied upon by the learned trial judge as stating the law on the subject, Rooney v Forest Industries Council of Papua New Guinea (supra) is to be distinguished from the facts of this case. In this case, the contract of employment specifically provides for termination for reasons other than unsatisfactory performance and/ or cause. The termination having been found by the Court to be unlawful and thus inferentially not being for unsatisfactory performance and/or a good cause, then the entitlements of the Respondent were to be in accordance with Clause 28(b).
That being the full entitlements for such a termination, in my opinion the Respondent was not entitled to the balance of the period of the contract remaining and I consider therefore that the learned trial judge erred in extending the proposition enunciated in Rooney v Forest Industries Council (supra).
The Appellant has conceded that the claim for special damages for distress and suffering could be affirmed, the only head of damages the respondent could legitimately claim plus interest.
In these circumstances therefore, I am content to uphold the appeal on this ground alone without needing to determine the other grounds of appeal.
I would therefore uphold the appeal with costs.
SHEEHAN J: I have read the judgment of the Chief Justice and my brother Kandakasi J. I agree with the conclusions reached and the orders proposed by them.
KANDAKASI J: This is an appeal against a decision of the National Court awarding the Respondent ("Mr. Tole") a sum of K160, 834.66 on the 14th of March 2001 as damages for wrongful dismissal. That followed an entry of judgement against the Appellant ("PNGBC") on the 7th of June 2000 and a refusal of an application by PNGBC for a stay of the assessment of damages. An appeal against the refusal to stay was filed and was set for hearing on the same date as this appeal but was abandoned at the hearing.
Arguments of the Parties
PNGBC argues that Mr. Tole is not entitled to the damages that were awarded to him by the National Court. It advances two reasons, the second being an alternative to the first. The first reason is that, Mr. Tole did not plead with sufficient particularity and pray for any of the damages that were awarded by the National Court. The second and or alternative reason is that Mr. Tole is entitled to the balance of his contract or 12 months entitlements under the contract, which ever of the two is the lesser. Then after the conclusion of the hearing and the Court reserved a ruling on the appeal, PNGBC through its counsel raised an addition ground, namely abandonment of the contract by the parties.
The Respondent argues that it has sufficiently pleaded and prayed for the damages that were awarded in relation to the first reason advanced by PNGBC. As for the second and or alternative reason it argues that the issue of entitlement to the balance of the contract was resolved in his favour. That was done first by the judgement in default and secondly by an earlier declaration under a separate but related proceeding O.S. 669 of 1999 that, PNGBC’s purported termination of his contract was null and void. Mr. Tole has not made any submissions or responded to the additional ground raised by PNGBC after the hearing.
Issues
The issues for determination are these:
First Two Issues – Pleadings
The first two issues are closely related. They involve the issue of pleadings so they are being dealt with together. The law on pleadings in our jurisdiction is well settled. The principles governing pleadings can easily be summarized in terms of, unless there is foundation in the pleadings of a party, no evidence and damages or relieves of matters not pleaded can be allowed. This is the effect of the judgements of this Court in Motor Vehicles Insurance (PNG) Trust v. John Etape [1995] PNGLR 214 at p.221 and Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370 at pp. 373 –374. These judgements re-affirmed what was always the position at common law and consistently applied in a large number of cases in our country. The list of such cases is long but reference need only be made to cases like that of Repas Waima v. Motor Vehicles Insurance Trust [1992] PNGLR 254 and Carmelita Mary collins v. Motor Vehicles (PNG) Insurance Trust [1990] PNGLR 580 at p. 582 for examples only.
This position follows on from the objects behind the requirements for pleadings. As the judgement in Motor Vehicles Insurance (PNG) Trust v. James Pupune (supra) at p. 374 said in summary, pleadings and particulars have the object or functions of:
"1. they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it;
It is clear law that, where a plaintiff’s claim is special in nature, such as a claim for loss of salaries or wages, they must be specifically pleaded with particulars. Unless that is done, no evidence of matters not pleaded can be allowed and relief granted. That is apparent from the judgements in the James Pupune and John Etape cases. These cases adopted and applied principles enunciated in those terms in authorities such as Ilkiw v. Samuel [1963] 2 All ER 879, per Diplock L J at pp. 980-891 and Pilato v. Metropolitan Water Sewerage and Drainage Board (1959) 76 WN (NSW) 364, per McClemens J at 365. This follows in turn from the fact that, our system of justice is not one of surprises but one of fair play. Reasonable opportunity must be given to each other by the parties to an action to ascertain fully the nature of the other’s case so that, if need be, a defendant can make a payment into Court.
In the present case, the question is, did Mr. Tole sufficiently plead the basis for the eventual award of K160, 834.66 in his favour? This requires an examination of his pleadings. His submission is that, this was a claim for damages for unlawful termination of a contract of employment and his losses and hence his damages were pleaded in paragraph 6 of his statement of claim.
Paragraph 6 of Mr. Tole’s statement of claim reads:
"By reason of the matters aforesaid the Plaintiff has been deprived of his salary and allowances and benefits he would otherwise have earned and he has thereby suffered loss and damage. Particulars will be provided after discovery and prior to trial."
On the other hand, PNGBC points to the prayer for relief which simply states:
"1. General Damages;
PNGBC argues that, Mr. Tole failed to specifically plead in its pray for relief special damages, if the pleading in paragraph 6 was to be carried through for a claim for the matters pleaded in that paragraph. Reliance is placed on the case of Uma More v. University of Papua New Guinea [1985] PNGLR 401, particularly at p. 405, where the Court said " a party cannot obtain relief which has not been requested or sought in the pleadings."
That was on an appeal to the Supreme Court, from the National Court. The National Court granted injunctive orders against persons not named in the proceedings and such orders were sought against them. The Court said at p. 405:
"... in civil proceedings it is essential to observe and follow established practice and procedure if or no other reason then to avoid confusion, uncertainty and consequences which are either unexpected and or unsought."
This was adopted and applied in Mussau Timber Development Pty Ltd v. Santee Mangis & Ors N920, by Jalina J who said at p. 7 that: "A party cannot obtain relief which has not been requested or sought in the pleadings." His Honour cited the words of Lord Russell of Killowen in London Passenger Transport Board v Moscrop [1942] 1 All ER 97, at p. 105 who said:
"This appears to me to have been a complete re-casting of the plaintiff's alleged cause of action, and the matter was unfortunately carried through without any amendment of the statement of claim. This should not be so. Any departure from the cause of action alleged or the relief claimed in the pleadings should be preceded, or, at all events, accompanied, by the relevant amendments, so that the exact cause of action alleged and relief claimed shall form part of the court's record, and be capable of being referred to thereafter should necessity arise. Pleadings should not be ‘deemed to be amended’ or ‘treated as amended’. They should be amended in fact."
This principle was adopted and applied by the Supreme Court in the Uma More Case (supra). There is no challenge by Mr. Tole on the correctness of this principle and its application to his case. His only argument is that he has sufficiently pleaded the basis of his claim.
As far as I can tell from the whole of Mr. Tole’s pleadings, per his statement of claim is this. He is a male person aged 43 (paragraph 1). He entered into a 3 years contract of employment commencing the 1st of June 1988 with the PNGBC which is a corporation having the capacity to sue and be sued (paragraph 2 and 3). The contract was however, prematurely terminated by PNGBC on the 11th of October 1999 (paragraph 4). At the time of his termination, the PNGBC paid him K144, 953.43, which was credited to his account (paragraph 7). The premature termination he claims deprived him of salary and allowances and benefits he would have received under the contract and the particulars of that would be provided after discovery but prior to trial (paragraph 6). The termination caused him mental distress, frustration and general disappointment (paragraph 8). He successfully applied to the National Court under O.S. 669 of 1999 for a declaration that his termination was null and void (paragraph 5). He was therefore, praying for general damages and interest on the judgement sum at 8%.
Clearly, on these pleadings, Mr. Tole did not plead his salary, wages and benefits loss mentioned in paragraph 6 with any particulars. Instead, he indicated that those would be provided after discovery and prior to trial. In any case, he did not ask for any relief in respect of these items because he was asking for general damages and interest on the judgement only. The pleading to the payment of K144, 953.43 in paragraph 7, in the absence of any other pleadings to the contrary could mean a pleading that, that was for the matters pleaded in paragraph 6. If it were not the case than, the onus was on Mr. Tole to plead that with the necessary particulars and show how that was not a payment for those matters, but he did not do that.
Following the entry of a default judgement, the matter was placed on the call-over list for the allocation of a date for an assessment of Mr. Tole’s damages. A call-over was conducted on the 16th of October 2000, at which this matter was listed for hearing on the 13th of November 2000. Despite notice of the call-over being given to PNGBC’s lawyers, no appearance was made for or on behalf of PNGBC. Mr. Tole’s lawyers gave notice of the trial date to PNGBC’s lawyers well before the trial date in writing. Despite that, PNGBC did not turn up in Court for the assessment of damages hearing on the 13th of November 2000. In the circumstances, the Court directed that affidavits and submissions be filed.
Mr. Tole deposed to an affidavit on the 10th of November 2000 and had its submissions filed on the 13th of November 2000. The PNGBC did not do likewise and did not do anything about the claim against it until the 26th of January 2001 when it filed a motion seeking to stay judgement on the claim pending a filing of its affidavit and submissions within 21 days. The grounds advance for that application was that, due to a disorganization of its lawyers, PNGBC was not able to avoid the default judgement and subsequently participate in the assessment of damages hearing. By the time that application was heard, the Court had already gone into its judgement and was finalizing it for delivery the following week. That application was dismissed because, the Court considered it was an abuse of process and the reason advanced as not valid. Appeal N0.27 of 2001 was therefore filed as a result but abandoned at the hearing of this appeal. Clearly therefore, PNGBC allowed the judgement to go against it by its own conduct. It is now turning around and complaining about the judgement raising arguments it should have raised in the Court below.
Decision
It is clear law that, if matters not pleaded are raised at a trial without objection, they may be the subject of submissions for relief and an award in damages.
This Court in the James Pupune (supra) and John Etape (supra) clearly stated the legal consequence that should follow in this type of situation. They held that, if a party fails to take objection to evidence being led at the trial of matters not pleaded, it could not later hack back at the pleadings and argue against any awards on such evidence on matters not specifically pleaded. The position was stated at p. 599 in the John Etape Case (supra) as follows:
"Where the plaintiff, however, is allowed to embark at the trial on matters which are generally included in his allegation of ‘loss of income earning capacity’ by calling evidence relating to his salary loss, for instance, the defendant cannot complain unless he objects at the time before the trial Judge and is overruled. No such objection was made at the trial to the evidence which the plaintiff sought to lead in the absence of particulars.
We would reiterate what this Court said in MVIT v. Pupune [1993] PNGLR 370, that where evidence is led without objection, a court is entitled to make findings on the basis of such evidence, provided it is within the general ambit of the plaintiff's claim. Here, the general ambit included both general damages for injuries suffered and a claim for loss of income-earning capacity. Loss of wages in those circumstances may well illustrate the loss of income-earning capacity."
The Court was persuaded to and it did adopt and applied pronouncements of principles as is represented by cases like that of Gould and Birbeck and Bacon [1916] HCA 81; (1916) 22 CLR 490 at pp. 517. The relevant part of that judgement was by Isaacs and Rich JJ in a joint judgement in these terms:
"But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest. There is abundant authority for this, even if the matter were required to rest on authority only. See, for instance Nevill v. Fine Art and General Insurance Co [1896] UKLawRpAC 58; (1897) AC 68 at p 76; Browne v. Dunn 6 R 67 at p 75, the relevant passage being quoted fully in Rowe v. Australian United Steam Navigation Co [1909] HCA 25; 9 CLR 1, at p 24."
But with the exceptions of fresh matters being introduced without objection at trial, parties are restricted to the case and relief detailed in their pleadings. In any other case, to alter pleadings a party must seek amendment and only if such amendment is granted can there be relief outside that which has been pleaded.
I summarised the principles that govern an assessment of damages after default judgement in Coecon Limited (Receiver/Manager Appointed) v. The National Fisheries Authority of Papua New Guinea (28/02/02) N2182. There I said:
"A survey of the authorities on assessment of damages after entry of judgement on liability mainly in default of a defendant’s defence, clearly show the following:
Examples of these authorities include the case cited above, Andale More & Manis Andale v. Henry Tokam & The State N1645; The State v. Hodson [1987] PNGLR 241; Kevin Patai v. Niugini Lumber Merchants Pty Ltd & Ors N1602; Komaip Trading v. George Waugulo & The State [1995] PNGLR 165 and Obed Lalip for himself and on behalf of Marae Kulap and Anor v. Fred Sikiot and The State N1457, mention a few of them."
But in this case, there was no trial. That is to say there was no trial on liability and issues between the parties. The matter was dealt with ex parte. By reason of that, there was no trial on the new claims or issues raised outside the pleadings for the first time. In fairness PNGBC should have been given notice of those new claims and the opportunity to either admit or deny them. Without such notice and opportunity being accorded to PNGBC, no evidence could be led and damages awarded on matters not pleaded. The default judgement only resolved the liability against PNGBC for the matters pleaded and for the relief prayed for in the statement of claim. It follows therefore that the assessment of damages could only be made for the relief actually pleaded.
The history of the case is that, a notice of a call-over at which a date would be fixed for a hearing of the matter hearing was given to PNGBC’s lawyers well before the call-over. PNGBC failed to attend the call-over. On that call-over, the 13th of November 2000 was fixed for an assessment of damages hearing. Notice of the date for hearing was communicated in writing to PNGBC well before the hearing date. Despite that, PNGBC failed to turn up at the assessment of damages hearing. The hearing was directed to proceed by way of affidavit and submissions. Mr. Tole swore to an affidavit on the 10th of November 2000 and was filed in Court. So the whole of the Mr. Tole’s claim even though outside the pleadings, was before the Court.
PNGBC had the opportunity to take objection to the material in Mr. Tole’s affidavit and submissions based on that, but did not do that. That failure did not however, amount to an amendment to the Mr. Tole’s pleadings to include matters that were not properly pleaded in the original pleadings for which default judgement was entered. The onus remained with Mr. Tole to properly plead and then prove what was in fact pleaded by way of damages. The moment he stepped outside the pleadings he went outside what was resolved by the default judgement. The Court in my view was therefore, left with only one of two options to take. The first was to proceed to assess damages and grant such relief as was properly pleaded for which default judgement was entered. The second was to allow an amendment to the pleadings and then adjourn the hearing to allow Mr. Tole to notify PNGBC of the additional claims and give PNGBC the opportunity either to admit or deny liability for that.
A party’s failure to turn up at a hearing and failing to raise objections to matters not pleaded are not one and the same thing after the entry of default judgement. A defendant against whom default judgement has been entered is entitled to do nothing, if for example, he does not object to the matters pleaded and more particularly the relief prayed for being granted against him. Such a defendant is entitled to expect judgement strictly for the matters pleaded and nothing else. If a plaintiff seeks to step out of the pleadings, then he is obliged to amend the pleadings and then allow the normal process of pleadings to take place before there can even be a hearing and judgement on matters not in the original pleadings.
In this case, Mr. Tole was allowed to lead evidence of matters not properly pleaded and was eventually granted relief not in the original pleadings. Mr. Tole did not even ask for an amendment to his statement of claim to include the matters that were not pleaded in his statement of claim. When this happened, both the plaintiff and the learned trial judge with respect went outside what the default judgement had resolved. It also, meant in effect that Mr. Tole was allowed to get to a relief without first filing a claim for it in terms of including it in his writ of summons and the statement of claim endorsed thereto. That in turn meant that, the normal course under the Rules were not allowed to take its full course in terms of PNBGC being served and opportunity given to it to file its defence, a reply to its defence, discoveries and interrogatories, before trial and damages.
The function of the Court Rules or the rules of practice and procedure is to enable a fair and expeditious hearing and disposal of disputes between parties. They fulfil the prime function of ensuring all parties have full and proper opportunity to be heard. This includes filing claims that set out necessary facts and contentions; allowing the filing of defence and enable discovery and interrogatories, give adequate notice of hearings of proceedings and a proper hearing before judgement.
It is the duty of a plaintiff to plead his claim with sufficient details or particulars. It is a breach of the Rules and it complicates claims unnecessarily by practices such as, was the one adopted by Mr. Tole in paragraph 6 of his statement of claim. There he pleads in a way making it necessary for PNGBC to seek discovery or better particulars by pleading " Particulars will be provided after discovery and prior to trial." Such a pleading gives no advantage to a plaintiff, since he cannot add to his statement of claim without an actual amendment to his statement of claim. Also, such a pleading casts no onus or obligation on a defendant to clarify or enlarge a plaintiff’s case and it simply has no foundation in the Rules.
The fundamental purpose of the Rules therefore is to enable a proper conduct of trials of disputes. They are not a set of traps designed to prevent an unwary litigant pursuing his claim by defaulting defence. That is why there is provision in the Rules (O1.r.7) for a dispensation of a strict compliance of the Rules in the interest of doing justice. They particularly do not and cannot substitute for the substantive law that governs the dispute. After all pleadings are only a means to an end but not an end in themselves: See Gould and Birbeck and Bacon (supra) as quoted and applied in the James Pupune Case (supra).
The Rules can not for instance change the laws of contract by allowing judgement for a plaintiff merely on account of a defendant’s default in complying with the Rules governing for example, appearances and defence, without having any foundation in contract. This is to say, unless there is basis for an action as a matter of substantive law, a party cannot be permitted to gain from a mere default of a compliance of the Rules. In other words, the Rules are there to assist parties to resolve their disputes fairly and expeditiously according to the substantive law that governs the dispute and relief can only be permitted only to the extent the substantive law can permit.
In the present case, it could be argued that PNGBC by its own conduct allowed the matter to be litigated against it in the way Mr. Tole saw fit, even for him to claim damages he did not specifically plead and pray for with sufficient particulars. Therefore, the National Court was entitled to accept and act on the uncontested evidence of Mr. Tole. The failures of PNGBC are such that, it would be most unfair and inequitable for the judgement Mr. Tole has secured fairly to be set aside or quashed for failure of pleadings. This is more so in the absence of any good and reasonable explanation from PNGBC for allowing judgement to go against it in the way it happened. Setting the judgement aside or quashing it, would in effect be allowing the PNGBC to hack back at the lack of pleadings when in fairness it failed to raise that issue in the Court below. Reliance could then be placed on the judgement of this Court in the James Pupune (supra) and John Etape (supra).
Such an argument could easily be accepted if PNGBC participated at the hearing and failed to take objections to matters not pleaded. Indeed in both the James Pupune (supra) and John Etape (supra) cases, the appellant did participate at the hearing, failed to raise objection to evidence being led on matters not pleaded and proceed to cross-examine and fully exercise its rights to be heard on the matters not pleaded. In this case, PNGBC had a default judgement against it. That resolved the issue of liability on the matters pleaded and prayed for. As noted earlier, PNGBC was entitled to expect judgement or a decision on the matters pleaded and prayed for as at the time of the default judgement. It neither had, nor could it ever be expected to expect judgement on matters not pleaded and outside the ambit of the default judgement, without going through the normal cause of pleadings, discoveries, interrogatories and a trial on the matters raised outside the pleadings.
For these reasons, I am of the view, with the greatest respect that the learned trial judge fell into error. I would therefore uphold the appeal based on the lack of pleadings.
This leaves me to consider the issue of whether Mr. Tole was entitled to recover the damages as a matter of substantive law. I consider this to be a more substantive issue because even if the learned trial judge was correct in allowing, Mr. Tole to get to a relief not pleaded, it has to be one he could get as a matter of substantive law. The substantive law here is the law of contract. So the question is whether Mr. Tole was entitled to the damages that were eventually awarded as a matter of contract law? This is in essence the second issue.
Second Issue - Mr. Toles Damages
Under contract law, where parties have set down the whole of their agreement in writing, evidence seeking to add or subtract from or vary or qualify the written contract can not be given and or accepted. This is what is called the parol evidence rule. For authorities on this, see Curtain Bros (QLD) Pty Ltd v. The State [1993] PNGLR 285; Goss v. Nugent [1833] 5 B& Ad.54; Gillespie Bros & Co. v. Cheney, Eggar & Co [1896] 2Q.B.59; Edwards v. O’Connor [1991] 2 N.Z.L.R 542. It is a rule that does have exceptions to it. It is open to parties to assert that a written contract or document does or does not contain the whole of an agreement and at trial adduce evidence to support the contention. But that will require appropriate pleadings and not supplied as in this case.
Here Mr. Tole pleaded the contract of employment without alteration as the basis of his claim for relief. Because he asserts and upholds the contract he is bound by its terms, including clause 28 which provides for the limits on compensation payable on termination of the contract. Since he acknowledges payment in terms of that clause, he is in fact acknowledging payment within the terms of the contract.
The National Court award of K160, 834.66 was made up as follows:
1. Loss of salary K 66,666.67
2. Annual leave pay K 7,821.85
3. Annual leave entitlement K 2,000.00
4. Gratuity K 8,438.35
5. Telephone allowance K 1,333.33
6. Housing allowance K 36,507.69
7. Utilities allowance K 2,666.67
8 Motor vehicle allowance K 28,133.33
9. POSF contribution (employer 8.4%) K 5,600.00
10. Club fees K 1, 666.67
Total K160, 834.66
There is no contest between the parties that the contract between them was prematurely terminated by PNGBC on the 11th of October 1999. By that time, a period of 1 year 8 months remained on the contract. There is also no dispute that Mr. Tole challenged the premature termination of the contract under O.S. 669 of 1999 and the National Court declared the termination null and void on the 3rd of December 1999. No appeal was lodged against that decision. Therefore, for all intents and purposes PNGBC accepted the decision of the Court that ending Mr. Tole’s employment was a breach of contract.
Following the orders of the National Court, PNGBC did nothing in terms of re-employing Mr. Tole, but paid him out. In its submissions, PNGBC refers to clause 28 of the contract and argues that upon termination, Mr. Tole was entitled to 12 months pay or the pay for the remaining part of the contract, which ever is the lesser. It then submits that pursuant to that clause, it paid K144, 953.43, which was for a period of twelve months of the 1 year 8 months remaining. PNGBC further submits that Mr. Tole accepted that payment and that put an end to any further claims against it. Furthermore, or in the alternative, the PNGBC argues per its submissions well after the close of the hearing of the appeal that the parties mutually terminated the contract by their conduct, in that they did nothing to restore their relationship.
Mr. Tole on the other hand argues that he did not accept the K144, 953.43 as a full and final payment or settlement of any claims he might have against the PNGBC for its unlawful termination of the contract. Instead these funds were credited to his account by the PNGBC without any request from him. He went on to submit that, when the PNGBC did nothing to restore the relationship between them, he could do nothing else but to sue for the balance of the contract less the 12 months for which the payment was made. He makes no response to PNGBC’s submissions after the close of the hearing.
I consider it necessary to address the additional submissions of PNGBC first because it is easy to dispose of. I would not entertain those submissions for two reasons. First, once a hearing is concluded in any proceeding, the parties are usually at no liberty to make any further submissions or adduce evidence as of right. If they wish to do so, leave of the court must first be sought and if such leave is granted, than a party or the parties may be further heard. In this case, the hearing was completed and the Court reserved its judgement to give consideration to the points raised. No leave was sought and granted for the PNGBC to make further submissions. Its further submissions are therefore not properly before the Court. As such they should be disregarded.
The second reason is simple. In this appeal PNGBC is taking issue on the lack of pleadings in Mr. Tole’s statement of claim. It was therefore incumbent upon it to fully plead in its notice of appeal its grounds of appeal. It has not in any way pleaded the allegation of the parties mutually agreeing to an abandonment of the balance of the contract. It is a totally new ground of appeal. Its failure to plead this in its notice of appeal failed to notify both Mr. Tole and this Court that its appeal was raising that issue as well. The law is clear on this, unless an appeal ground is pleaded, it can not be raised. See Andrew Kwimberi of Paulus M Dowa Lawyers v. The State (27/03/98) SC545, per Injia J. with whom Woods and Hinchliffe JJ., agreed.
I now move onto the arguments based on the rest of the grounds of appeal, which includes a proper interpretation of the provisions of clause 28 of the parties’ contract. That clause stipulates that:
"28. TERMINATION OF CONTRACT BY THE BANK
The Bank may at its discretion summarily terminate this Contract of Employment provided that Disciplinary Procedure under Clause 29 has been implemented for serious or wilful misconduct or if the officer commits an indictable criminal offence or becomes of unsound mind. For the purpose of this Clause, the Bank shall no be required to meet the costs of repatriation or provide on going accommodation or accommodation costs."
For the purposes of clause 28 (a) there is no other provision in the contract concerning the issue of termination. So it seems the reference to "in accordance with the provisions of this Agreement" means the provisions of clause 28. The whole of this clause deals with the issue of termination and compensation payable. Provision is made for two situations. If the reason for termination is for other than satisfactory performance or disciplinary reasons, compensation is fixed at a maximum of twelve (12) months’ salary and benefits with one month’s accommodation. If however, the termination involves a serious disciplinary matter, then no compensation is payable provided clause 29 procedures have been followed. If they were not followed, then while termination would still be effective, compensation for termination in breach of contract would be in accordance with clause 28 (b) and (c).
There is no issue that Mr. Tole was suddenly and unlawfully terminated on the 11th of October 1999, not necessarily for a serious disciplinary matter. The National Court ruled on the 3rd of December 1999, that the termination was null and void. There was no appeal against that decision so the PNGBC accepted that ruling as correct. It is trite law that unless an order or a judgement of a court is set aside or quashed by a higher authority having the power to do so, there is an immediate obligation to comply by those who are obliged to comply: see Romer LJ., in Hadkinson v. Hadkinson (1952) 2 ALL ER 567 at 569; Yap v. Tan [1987] PNGLR 227 & Soso Tumu & Ors v. The State & Ors (28/02/02) N2190.
Mr. Tole refers to the National Court judgements of Nahau Rooney v. Forest Industries Council [1990] PNGLR 407 and Peter Agilo v. Sir Mekere Morauta & Ors (28/02/02) N2102, and argues that, he was entitled to full pay out of the balance of his contract. As such, he argues that, the learned trial judge made no error when he applied the Nahau Rooney Case to his case.
In my view, both the Nahau Rooney and Peter Agilo Cases are distinguishable from the present. The Court in the Nahau Rooney Case held that the plaintiff was entitled to recovery the balance of her contract period following her unlawful termination. In that case, unlike in the present, the court found that there was no provision in the contract regarding termination upon condition. The Court reasoned as follows:
"There is no clause providing for any termination upon condition, unlike most government contracts of employment which give the right to terminate on some months notice. There is no such right here which means the defendant is liable for the full term. The contract is a contract of employment under the Forest Industries Council Act (Ch No 215) and therefore I agree that the defendant and the plaintiff contracted out of the Employment Act (Ch No 373) and therefore the power in the Employment Act to terminate before the expiration of the term does not apply."
As for the Peter Agilo Case, the plaintiff Mr. Peter Agilo was the then Police Commissioner, which is an important Constitutional office. A number of procedures leading up ultimately to the National Executive Council had to be followed before he could be terminated. The State failed to follow all of those procedures as well has the terms of his contract. In the process, the State ignored the terms of the contract. He was terminated in a much humiliating manner without following the procedures in the relevant contract even for instant dismissal. I therefore held the state liable in damages to the plaintiff for the balance of the contract in fairness and in equity given the Constitutionally important position Mr. Peter Agilo had occupied.
In this case, the parties specifically agreed in terms of clause 28 of the contract as to the consequence that should follow if PNGBC terminates Mr. Tole’s contract with it prematurely for reasons other than satisfactory performance and or cause. It was agreed that Mr. Tole should receive 12 months entitlements or the balance of the contract period, which ever of the two is the lesser. His termination was in accordance with the agreement. In his argument, Mr. Tole argues that, PNGBC terminated his contract with it outside the contract so as to come within the reasoning in the Peter Agilo Case. There is however, no demonstration of how PNGBC acted outside the contract other than to terminated him before the end of his contract without reason and notice and how Mr. Tole’s then employment setting with PNGBC was important in terms of the PNG Constitution.
As I said in the Peter Agilo Case, the Court’s duty in a case of breach of contract is to interpret the terms of a contract in a way that will give effect to the intentions of the parties. It is not the duty of the Court to adopt an approach that has the effect of re-writing the contract in the disguise of interpreting it. The only exception there, is where the wording of the contract does not support a meaning that is argued for.
In this case, the parties agreed in clause 28 of their contract that, PNGBC could terminate the contract either for "unsatisfactory performance" or "for reasons other than" that before the expiry of the contract. If PNGBC chooses to terminate the contract for a serious disciplinary matter than, the disciplinary procedure under clause 29 should be first adhered to. If however, it chooses to terminate for any other reason then, it could do so but must pay Mr. Tole the balance of his contract or 12 months entitlements which ever is the lesser of the two.
The termination was not for a serious disciplinary matter, therefore, he was terminated "for reasons other than" that. As at the time of his termination there remained a period of 1 year 8 months of the three-year contract. PNGBC paid Mr. Tole his entitlements for 12 months in accordance with clause 28 (c) of the contract. Nothing further was therefore due to him. In my view therefore, the learned trial judge fell into error when he decided to make an award for the whole of the balance of the contract period less the 12 months already paid.
Also, there was evidence before the learned trial judge of Mr. Tole having secured a part time job as a consultant to a finance company. No evidence was however give as to the amount of income Mr. Tole was receiving under that employment. A closer look at the judgement the subject of this appeal, it seems to me with respect that, the learned trial judge did not give any consideration to that lack of evidence.
Further, in any assessment of damages for unlawful termination of a contract or any other damages for that matter, there is always the need to consider whether the plaintiff had taken steps to mitigate his loss. Indeed that issue was covered at some length in both the Nahau Rooney and Peter Agilo Cases. The plaintiffs in those cases were awarded damages for the full balance of their contract because the Courts were satisfied that despite the best endeavours of the plaintiffs they could not secure alternative employment and therefore minimize their losses.
The learned trial judge in the instant case, treated that issue in these terms at page 9 of his judgement:
"I am satisfied that the plaintiff has mitigated his loss. He is still looking for a job with equivalent benefits as he was receiving whilst employed by the defendant, although he is a consultant on a part-time basis."
When the learned trial judge had before him evidence of Mr. Tole having secured an alternative employment, it obviously meant that Mr. Tole’s damages (if further damages were due) would have to be reduced to whatever amounts he was being paid under his new employment. Mr. Tole gave no evidence on this. Therefore, in the absence of any evidence to the contrary, it could only mean he did not suffer any reduction in his level of income and or entitlements. Accordingly no awards could have been made but was made. This amounts to a demonstrable error on the part of the learned trial judge.
Furthermore, the awards were made on the basis of a purported variation of the contract between Mr. Tole and PNGBC. The only evidence on this was a hand written advice from the Manager, Human Resources of PNGBC. Clause 34.1 of the contract expressly provided for the "Managing Director to vary, amend, add or delete any part of the contract." There was no evidence of the managing director doing so in terms of the hand written purported advice of the PNGBC. Not only that, there was no foundation in the pleadings claiming any such variation. In my view therefore, with due respect, the learned trial judge fell into error in assessing and awarding damages at a rate that was not properly agreed to by PNGBC or the parties for that matter.
For these reasons I would uphold the appeal against the award of damages for the balance of the contractual term in the sum of K160,834.66 and interest based on that amount of K9,377.84.
In short I would uphold the appeal based on lack of pleadings and also on the ground that Mr. Tole has already been paid the compensation agree under the contract of employment. Consequently, I would set aside and quash the award of K160,834.66 and the interest calculated and awarded on that amount.
Costs
The final issue to resolve in this appeal is costs. PNGBC submits that each party should be ordered to bear their own costs of the National Court proceedings. As for the costs of the appeal, it argues that Mr. Tole should be ordered to pay its costs.
In the National Court, Mr. Tole sued for damages for breach of contract and damages for stress, anger and frustration. As I have just found, Mr. Tole had no reasonable cause of action as a matter of contract law. When he was unlawfully, terminated he was entitled to damages within the terms of the contract. He was paid the amount he was entitled to receive for being so terminated. It would follow therefore that, there was no cause for him to suffer stress, anger and frustration. The National Court, as I have found with respect, erroneously awarded damages for unlawful termination and for distress and suffering. The appeal is only against the ward of damages for unlawful termination. For reasons only, know to PNGBC, it has accepted the award against it for distress and suffering. In these circumstances, I am of the view that PNGBC should be ordered to pay Mr. Tole’s costs of the National Court proceedings while, Mr. Tole should be ordered to pay PNGBC’s costs of the appeal. I would therefore make orders for costs in those terms.
Orders of the Court.
_____________________________________
Lawyers for the Appellant: Posman Kua & Aisi Lawyers.
Lawyers for the Respondent: Pacific Legal Group Lawyers.
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