Kaen v Telikom (PNG) Ltd [2004] PGSC 44; SC746 (11 May 2004)

SC746

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 46 OF 2002

BETWEEN:
MATHEW PIAKE KAEN
Appellant

AND:
TELIKOM (PNG) LIMITED
Respondent

Waigani: Kapi CJ., Salika J., Sevua J
2004: 26th April & 11th May

CONTRACT—Breach of implied term of contract—To obey directions of employer—
Entitlement under the contract.

Counsel:
E. Waifaf, for the Appellant
I. Molloy with S. Ketan, for the Respondent

11th May 2004

1. BY THE COURT: This is an appeal against a decision of the National Court (Davani J.) in which the Court concluded that the Appellant was in breach of an implied term of a contract of employment and was therefore lawfully terminated in accordance with the contract and ordered his entitlements to be paid under the contract.

2. The relevant facts giving rise to this appeal are these. Mathew Piake Kaen (Appellant) commenced employment with Telikom (PNG) Limited (Respondent) on 14th May 1984. He was eventually promoted to the position of Manager, Corporate Services on 15th September 1998. The terms of his employment in this position is governed by a contract of employment dated 1st September 1998.

3. In a letter dated 1st July 1999, the Respondent suspended the Appellant for an indefinite period with pay effective as from the 2nd July 1999. The reason was to investigate allegations of maladministration and mismanagement by the Appellant. In the

letter of suspension, the Respondent advised the Appellant:

"For the duration of your suspension, you are not to enter Telikom premises unless your presence is required by the Investigations Team."

4. There is no evidence of any subsequent investigations or the result of any such investigations.

5. On 9th July 1999, there was a confrontation between the former Managing Director of Respondent, Thomas Tulin and the then Managing Director, Mr Philip Aki. Mr Tulin was accompanied by several others including the Appellant. This incident took place in Mr Aki's office. It is alleged that Mr Aki was assaulted.

6. On 15th July 1999, Mr Kilori Sepoe was appointed Manager—Corporate Services in

the Appellant's position.

7. The Appellant sued the Respondent and sought orders for:

1. Reinstatement to his position, alternatively
2. Salary and other entitlements for the remaining period of his contract of employment.
3. General damages for stress, distress and loss of reputation.

8. The Trial Judge determined that the Appellant was impliedly terminated on 15th July 1999 when Mr Sepoe was appointed Manager—Corporate Services. She further held that even though the Appellant was not involved in the assault on Mr Aki, he was nevertheless present in Mr Aki's office and determined that this was in breach of an implied term of the contract, namely breach of direction not to enter Respondent's premises. Consequently, she ordered entitlements to be paid which consists of:

1. Base salary to date of termination which is K70,000.00 calculated pro-rata from the last pay to 15th July 1999
2. Payment of unused recreation leave accrued up to 15th July 1999.
3. Gratuity pro-rated to 15th July 1999.
4. Payment of amount equivalent to an economy air ticket for the Appellant and approved dependants.
   

9. The Appellant has appealed against the decision on the following grounds:

"3.1 The learned trial judgment erred I both fact and law in her holding that terms could be implied into the Plaintiff's employment contract against the evidence of a complete contract containing the necessary terms of the contract relevant for determination of the issues before the Court and so erred in actually implying terms into the contract.

3.2 The trial judge erred both in fact and law in Her Honour's conclusion that the Plaintiff "had in effect breach directions from the Defendant's office . . . not to enter Telekom's premise" when it was not so pleaded in defence as an instance of or ground for termination and that the Defendant had terminated the Plaintiff for failing to abide by such direction.

3.3 The learned trial judged erred both in fact and law in holding that the Plaintiff had been impliedly terminated when the Defendant failed to establish in evidence the act of termination specification pleaded in the Amended Defence.

3.4 The trial Judge erred in both law and fact in holding that the Defendant had properly terminated the Plaintiff's employment contract when on the law and evidence before the Court such finding could not be made for the Defendant.

3.5 Having found that termination took effect on 15th July 1999 was outside of the Defendant's pleading. The learned trial Judge erred in both fact and law which is not assessing the Plaintiff's final entitlements pursuant to Clause 6.2(e) of the Plaintiff's employment contract.

3.6 The trial Judge erred both fact and law in elevating the Defendant's "direction" forthe Plaintiff " . . . not to enter Telikom 's premises . . . " as a term of condition of the employment contract the breach of which could warrant instant dismissal despite the evidence that the Plaintiff had not been paid during the suspension period and that the Plaintiff was there merely to find out about his non-payment contrary to the terms of the

suspension notice."

10. The grounds of appeal raise the following issues for determination:

1. Whether the direction by the Respondent not to enter Telikom's premises was part of an implied term of the contract to obey orders?
2. If it is, whether the Appellant breached the direction by simply being present in Mr. Aki's office on 9th July 1999?
3. Whether the breach of the direction was pleaded in the defence?
4. Whether the termination is governed by clause 6.2(d) or clause 6.2(e) of the contract of employment?
   

11. We will address the first two issues together. In respect of implied terms of the

contract, the trial judge held:

"The law is that the employer is at liberty to terminate for cause or for none as long as termination is in accordance with the terms of the contract. In this case, termination may have been implied The law is that implied terms of a Contract would include duties on the part of the Employee to exercise care and skill, to obey orders, to exercise good faith and not to be involved in misconduct (re Fridman, The Modern Law of Employment, ch 28;

12. Macken O'Grady, The Law of Employment, Edn, pg 141). Brian Brooks, Contact of Employment, 3rd Edition, states at pages 39 and 40:

There are two sets of terms in a contract of employment; First, those expressed by the parties ad second those which are called implied terms. This, it is implied by operation of law that the worker will provide the service personally, that he will obey orders, that he will display due competence and care in the discharge of his tasks and that he will perform his function in good faith. Any conduct which is incompatible with the fulfilment of these terms is a ground of dismissal of the employee by the employer even when there is no express

term in the contract . . . "

13. The trial judge held that it was an implied term of the contract to obey orders during the period of the contract. Counsel for the Appellant was not able to refer to any authority contrary to the law cited by the trial judge. We find that the trial judge was correct in law in her conclusions.

14. The next question is whether the Appellant was on the premises to inquire about the payment of his salary, and therefore, he was not in breach of the direction. Counsel for the Appellant submits that the Appellant's presence in Mr Aki's office on 9th July had nothing to do with the confrontation and assault on Mr Aki. He further submits that the Appellant was there to inquire about the payment of his salary while on suspension and therefore he did not breach the contract. The same argument was advanced before the trial judge. The trial judge held:

"There is no direct evidence of the plaintiffs involvement in the assault upon Mr Aki. The evidence does not show the part he played in this incident He claims he was only an observer. However, it is undisputed that the plaintiff was in Mr Aki's office, he had in effect breached directions from the defendant's office ' . . . not to enter Telikom 's premises . . . '"

15. We find that regardless of the reasons for his presence on the premises, the Appellant was in breach of the direction given not to enter Respondent's premises. He was not there on the basis of any invitation by the Investigations Team. In any case, we cannot accept the submission that the reason he was present was that he was there to inquire about the nonpayment of his salary during the period of suspension and that it was co-incident that he met up with Mr Tulin and others at Mr Aki's office. If this was the reason for going to the premises, he would have gone to inquire about salary in the appropriate section of Telikom that deals with salary matters. The evidence suggests that he was there because Mr Tulin asked him to go along and not because he was there to enquire about his salary. We would dismiss these grounds.

16. The third issue has no merit and can be disposed of briefly. Counsel for the Appellant submits that the defence of breach of the implied terms of the contract by the Appellant was not pleaded by the Respondent in defence. The Respondent pleaded this issue in the Amended Defence (pages 38-40 of the Appeal Book). We would dismiss this ground.

17. The main issue contested before us relate to whether the termination in the present case is covered by clause 6.2(d) or clause 6.2(e) of the contract of employment. Clause 6 is in the following terms:

"6.1 In the normal course of this Contract, the Employer's employment shall be terminated at the conclusion of the Term; 6.2 Notwithstanding clause 6.1 the employment of the Employee may be summarily terminated on the occurrence of any one or more of the following events:

(a) By the Employee giving three months notice in writing; or
(b) By mutual agreement between the employer and Employee; or
(c) By the employer with or without notice if the employee by reason of mental or bodily infirmity or for any other reason whatsoever unfit to discharge or incapable of discharging his obligations under this Contract or by the Appointing Authority with or without notice where the employee is convicted of an indictable offence, whether or not the offence to which he is convicted and sentenced related to his employment.
(d) By the Employer dismissing the Employee with or without notice for the Employer's breach of this Contract and in the event the employee shall not be entitled to receive and Employer shall not pay the Employee the full benefits which would otherwise be payable to the Employee pursuant to this agreement, for the unexpired duration of the Agreement Termination entitlement as per s.3(b) will be paid to the employee by the Employer.
(e) By Telikom dismissing the Employee with or without notice not subject to clause 6.2(b), (c), or (d) the Employee shall be entitled to to receive and the Employer shall pay the Employee, the full benefits which would otherwise be payable Employee, pursuant to this Agreement, for the unexpired duration of this agreement, or."

18. Counsel for the Appellant submits that the trial judge erred in not concluding that the termination in this case is covered by clause 6.2(e). On the other hand counsel for the Respondent submits that the trial judge was correct in her ruling and it comes within clause 6.2(d) of the contract of employment.

19. It is clear from the ruling by the trial judge that the Appellant breached the implied term of the contract by disobeying the direction not to enter Telikom premises and that this case clearly falls within clause 6.2(d) of the contract. We would dismiss this ground of appeal.

20. Counsel for the Appellant has not questioned the assessment of entitlements awarded to the Appellant under clause 6.2 (d) of the contract.

21. The formal order of the Court is that the appeal is dismissed with costs to the Respondent.
_______________________________________________________________
Warner Shand: Lawyers for the Appellant
Ketan: Lawyers for the Respondent