Boinamo Enterprises Ltd v Carey [2004] PGSC 25; SC744 (30 April 2004)

SC744

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA 34 OF 2002

BOINAMO ENTERPRISES LIMITED

AND

MICHAEL EDWIN CAREY

WAIGANI: KAPI, CJ; LOS & SALIKA, JJ
July, 2003; 30 April 2004

EMPLOYER – Employee – Employment Contract – partly in writing – partly oral – employee terminated outside of the contract – Employment Act applies – Section 34(4) of the Employment Act

Counsel:
Mr P M Dowa for the Appellant
Mr J Bray for the Respondent

30 April, 2004

BY THE COURT: The respondent in this matter sued the appellant Boinamo Enterprises claiming damages for wrongful dismissal. The respondent comes from 13 Tannadice Court, Degents Park, Queensland, Australia. By agreement in about October 1996 the appellant company agreed to employ the respondent who also agreed to serve them as a Building Supervisor at a salary of K55,000.00 per annum, payable fortnightly plus a bonus. The agreement was partly oral and partly in writing. The oral part of the agreement was made at an interview by telephone on or about 16 October 1996 between the Respondent and Mr Colin Tierney on behalf of the appellant. The written part of the agreement was contained in a contract of employment signed by the Respondent dated 1 November 1996 which was sent by facsimile to the appellant.

It was an expressed term of the agreement that the employment of the plaintiff should continue until determined by four weeks notice on either side.

The respondent commenced employment with the appellants on 4 December 1996 and received four fortnightly payments before being terminated from employment on 3 February 1997. Upon termination the respondent was paid four weeks salary in lieu of notice.

The respondent alleged that the appellant company wrongfully and in breach of the agreement and without giving him 4 weeks notice in writing or any notice to determine the said employment or payment in lieu thereof terminated his employment orally through Mr Collin Tierney with immediate effect.

The respondent claimed K77,169.46 as damages plus special damages, damages for mental stress, costs and interest. Liability was determined.

The National Court ruled that the appellant had failed to comply with the terms and conditions of the employment contract by dismissing the Respondent from his position of Building Supervisor with the company. In so doing, the Court found that that the company unlawfully dismissed the Respondent.

The appellant does not appeal against the finding of liability against it. It appeals against the judgement on assessment of damages only.

The National Court gave its decision on 8 April 202 awarding K23,042.68 to the Respondent made up of:-

(a) Salary K11,042.68
(b) Balance of payment

4 weeks in lieu of notice K 604.45
(c) Pro-rata leave pay K 1,057.50
(d) Living allowance K 2,000.00
(e) Special damages K 1,116.00
(f) Interest at 8% for services

Of writ until 8 April K 6,366.49

TOTAL K 23,042.68

The appellant being aggrieved by this award appeals against the whole of that decision of the National Court. The grounds of the appeal are:-

(1) His Honour erred in that he failed to take any or proper regard of the following admissions on the pleadings -

• (a) that the Respondent was employed by the Appellant under a contract of employment made partly orally and partly in writing.
• (b) There was an express term of the agreement that the employment of the Appellant should continue until determined by 4 weeks’ notice on either side;
• (c) Alternatively to (b), it was an implied term of the said agreement that the Respondent’s employment should be determinable by reasonable notice, and that reasonable notice in the circumstances was 4 weeks.
  

2. His Honour erred in failing to restrict the Respondent’s claim for damages to his loss during the period of proper notice.
3. His Honour erred in failing to give effect to the principle that, in an action for breach of contract, it is assumed that the Defendant would have performed the contract in the manner most beneficial to himself.
4. His Honour erred in calculating the Respondent’s damages by reference to the time it should have taken him to obtain alternative employment instead of by reference to the period of proper notice.
5. His Honour erred in finding that the allegation in paragraph 5 of the Statement of Claim that the employment could be determined upon reasonable notice, namely 4 weeks, was a reference to paragraphs 10 and 11 of the written part of the agreement, and thereby ignoring –
   
   • (a) the admission on the pleadings that the agreement was partly oral;
   • (b) it was alleged in the alternative, and admitted, that the same was an implied term.
     
6. His Honour erred in that he ventured outside the pleadings, and thereby denied the Appellant a reasonable opportunity to be heard as required by the principles of natural justice.
   

The respondent has also filed a cross- appeal . He appeals from part of the judgement of the National Court being inadequate assessment of damages. The grounds of his cross-appeal are:-

(a) That His Honour erred in fact and law when he held that the Plaintiff is entitled to damages but to a lesser amount that he is claiming.
(b) That His Honour erred in finding that figures calculated on the basis that the Plaintiff is entitled to damages for the ten remaining months of his contract is an unreasonable claim.
(c) That His Honour erred in finding that any damages to be assessed should be done so over a period of five months instead of the full ten months being the balance of the contract.
(d) His Honour erred, in not awarding any damages for distress, frustration and disappointment in that he acted upon wrong principles allowed extraneous or irrelevant principles to guide or affect him.
(e) His Honour erred in not awarding the damages claimed for loss and enjoyment of accommodation, the Plaintiff was entitled to under the Contract.
(f) His Honour erred in only awarding K1,057.60 for pro-rata leave pay when the Plaintiff is entitled to the full amount claimed.

We deal with the appeal first. The National Court found that the Respondent was unlawfully dismissed from the Company. The Respondent was employed on terms under a Contract of Employment. Under Clause 10 of the contract of employment the company could, if certain circumstances arose, terminate the contract. Under such termination, the employee was entitled to a minimum of 4 weeks notice.

Under clause 11(1) of the Employment Contract, the appellant could terminate the Respondent, if it was found after an investigation, that the respondent was unfit, incapable or negligent in the discharge of his duties. Under such circumstances there is no provision for time to be given before termination.

It is appropriate to set out Clauses 10 and 11 for clarity.

"10: Redundance

If prior to the expiration of the employees contract period, it is found that due to constitutional charge, or localisation or lack of work, it is necessary to terminate the contract, the employee will be paid repatriation fares and shall be entitled to a minimum of 4 weeks notice.

11: Termination

In addition to the above redundancy provision, there is also provision whereby the period of employment can be terminated.

(1) The employment may be terminated if after investigation of circumstances the employee is unfit or incapable of discharging the duties of his position or is negligent in the discharge of his duties. In this situation the fares necessary to repatriate the employee and dependants shall be deducted from his salary.
(2) The employee may terminate his employment after giving four weeks notice if such termination takes place before he has completed one year employment. The fares necessary to repatriate the employee and his dependants shall be deducted from his salary and or retiring gratuity.
(3) In consideration of Clause 12(ii) and if the Employer determines that the employee defaults or terminates this contract or terms specified in schedule "A" prior to 6 months service it be necessary to deduct costs in respect of employment. Costs and airfares from his salary".

The National Court Judge found that the Respondent was terminated unlawfully by the appellant. This meant that the termination was not in compliance with Clauses 10 or 11 of the Employment Contract. That decision is not appealed, so the appellant has by its conduct accepted that ruling that the termination was unlawful and that the decision on liability was correct.

The National Court ruling means that the decision to terminate the Respondent was not because there was constitutional change, or localisation or lack of work. It also means that the termination was not based on an investigation, which found the respondent unfit or incapable or negligent in discharging his duties as Building Supervisor. Again that decision has not been appealed.

In the light of those circumstances and the finding of the Court that the Respondent was unlawfully terminated, what was appropriate or fair.

The learned trial judge said:-

"I am of the view that any damages to be assessed should be done so over a period of five months. I see that as a fair and reasonable time for a person of his experience, seniority and expertise in the building industry to find further permanent employment".

The respondent had claimed for 10 remaining months of his contract. The learned trial judge cut the claim by half and reduced the time period to 5 months. Was the trial judge’s assessment unfair? The law in this regard was settled by this court in Ereman Ragi and the POSF Board v Maingu (Unreported Judgement of the Supreme Court dated 29th June, 1994, SCA 459) and confirmed in Naged Wally Zarepa v Ellison Kauvo & Ors (Unreported Judgment of the Supreme Court dated 29 November, 1999, SC623) As the Respondent was unlawfully terminated and the termination was outside the terms of the employment contract we are of the view that, the provisions of the Employment Act should then apply.

In that regard we think that the provisions of s.34(4) of the Employment Act apply. That provision says:-

34(4) Where there is no provision in a contract of service for notice of intention to terminate, the length of the notice shall be not less than –

(a) one day’s notice if the employee has been employed for less than four weeks; or
(b) one week’s notice if the employee has been employed for not less than four weeks and for less than one year; or
(c) two weeks’ notice if the employee has been employed for not less than one year and for less than five years; or
(d) four weeks’ notice if the employee has been employed for five years or more.

In this case the Respondent worked for only 4 months. He should, therefore according to s.34(4) of the Employment Act, have been given only one week notice or 1 week pay in lieu of notice. The learned trial judges reasons for awarding 5 months damages was done on what he thought was fair and reasonable. We are of the view that after he correctly ruled that the respondent was unlawfully terminated he ought to have assessed the respondent’s damages under the Employment Act. With respect we are of the view that the learned trial judge erred in awarding damages of 5 months.

It is not necessary to address the other grounds of appeal. We accordingly allow the appeal, quash the National Court decision and order that damages be assessed for a period of 1 week. That may not seem fair and just but this is justice according to law.

The cross-appeal is affected by the way we have decided the appeal in the first instance. In the circumstances the cross-appeal is dismissed.

Costs of the appeal and the cross-appeal are awarded to the appellants.
___________________________________________________________________
Lawyer for the Appellant/Cross-Respondent : Paulus M Dowa
Lawyer for the Respondent/Cross-Appellant : Pryke & Bray Lawyers