Bank South Pacific Ltd v Nad [2010] PGSC 56; SC1278 (14 May 2010)

SC1278

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 41 OF 2008

BETWEEN:

BANK SOUTH PACIFIC LIMITED
Appellant

AND:

GIBSON NAD
Respondent

Waigani: Mogish, Gabi & Yagi JJ
2009: 26th October &
2010: 14th May

SUPREME COURT APPEAL – Civil appeal – breach of employment agreement – procedural irregularity – right to be heard – failure to accord an opportunity to be heard on oral submissions at trial – substantial miscarriage of justice – judgment quashed – award of damages set aside – re-trial ordered.

Facts:

The respondent was employed by the appellant under an employment agreement for a period of 3 years. The appellant terminated the agreement approximately 11 months before the expiry of the agreement. The termination was due to restructure, which rendered the position held by the respondent redundant. The respondent sued the appellant alleging unlawful termination and claimed damages.

The trial judge heard the evidence and adjourned to a date for the purpose of the parties preparing written submissions and to present both their written and oral submissions.

On the date appointed there was no formal hearing conducted. The associate to the trial judge simply collected the written submissions from the lawyers representing the parties and delivered them to the trial judge in chambers. The trial judge did not hear oral submissions from the parties.

The trial judge found the appellant liable and awarded damages to the respondent for the unexpired portion of the employment agreement, redundancy entitlement and loss of property, totaling K301,629.00.

The appellant appeals against the finding of liability and award of damages.

Held:

(1) The failure by the trial judge to afford opportunity to the parties to make oral submissions amounts to a fundamental procedural irregularity resulting in a denial of a right to be heard.

(2) The whole of the judgment of the National Court made on 2nd of May 2008 is quashed and the award in damages be set aside.

(3) The matter be remitted back to the National Court to be tried before another judge.

(4) The respondent pay the appellant's costs in the appeal to be taxed, if not agreed.

Cases Cited:

Jimmy Mostata Maladina v. Posain Polok (2004) N2568
Kumagai Gumi Co. Ltd v National Provident Fund Board of Trustees (2006) SC 837
Charles Bougapa Ombusu v The State (No. 1)[1996]PNGLR 335 SC496
Air Niugini and National Airline Commission v Denis Salter (2001) SC 679
Curtain Brothers (Queensland) Pty Ltd & Another v The State [1993] PNGLR 285
Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694
Pacific Foam Pty Ltd v Zurich Pacific Insurance Ltd (1998) N1745
Pama Anio v Aho Baliki (2004) N2719
Charles Bongapa Ombusu v The State (No. 2) [1997] PNGLR 699
Gibson Gunure Ohizave v The State (1998) SC 595
Fred Bukoya v The State (2007) SC 887

Counsel:

R. Bradshaw, for the Appellant
G. Konjib, for the Respondent

14th May, 2010
DECISION

1. BY THE COURT: The appellant appeals against a judgment of the National Court delivered on 2nd of May 2008 where the Court found the appellant liable for wrongful termination of a contract of employment it had with the respondent and consequently awarded damages in favour of the respondent.

2. The facts of the cases are that; the respondent commenced employment with the appellant in February 1980 as a payroll clerk. At that time the appellant was trading as Papua New Guinea Banking Corporation Ltd (PNGBC Ltd). In or about 1998 or 1999 the PNGBC Ltd amalgamated or merged with Finance Pacific Ltd. In or about 2001 the merger was dissolved and PNGBC Ltd separated from Finance Pacific Ltd and operated as an independent entity.

3. Over time, the respondent was progressively promoted to various higher positions within the organization. Under the employment agreement, the appellant was employed as Relationship Manager.

4. The respondent claims that in 1997 the PNGBC Ltd and the PNGBC Staff Association entered into an industrial agreement. This agreement is in dispute. The appellant says that such agreement never existed and maintains that the only agreement that existed was the agreement made in 1994.

5. The respondent was initially employed by Pacific Finance Ltd. He was employed under a written agreement made on 20th of January 2000. The agreement was for a period of 3 years commencing on 3rd of January 2000. The agreement continued even after the dissolution of Pacific Finance Ltd and subsequent take-over by the appellant in 2001. The appellant appeared to have accepted and honoured the terms of the agreement.

6. On 11th of February 2002 the appellant terminated the employment agreement with the respondent.

7. The termination was made by a letter of the same date. The letter of termination cited clauses 8 and 9 of the employment agreement as the basis for the termination.

8. Upon terminating the agreement, the appellant paid the respondent 3 months salary and other benefits as severance entitlements, which it says the respondent was entitled to under the terms of the agreement.

9. The appellant's reason for terminating the agreement was that it was undertaking a strategic path within it's lending division aimed at improving, amongst others, its customer service standards and consequently it decided that the respondent's position was no longer required. In other words, due to restructure undertaken by the appellant, the position held by the respondent was abolished or made redundant.

10. The respondent claimed that the position he held was a critical and necessary function or position and the abolishment of the position was unmeritorious and therefore the termination was without any lawful or justifiable cause in breach of the employment agreement. In the alternative, he claims that if the abolishment of his position was proper in the circumstances; his removal or termination should be implemented in accordance with the terms stipulated in the Redundancy, Redeployment and Retrenchment Agreement 1997.

11. The respondent apparently disputed the action by the appellant and sued for unlawful termination of the agreement and damages.

12. He claims damages pursuant to the Redundancy, Redeployment and Retrenchment Agreement 1997.

Grounds of Appeal

13. There are nine grounds raised by the appellant in the appeal. However, most of the grounds are similar, if not, substantially the same. We therefore summarize the grounds into three broad categories for consideration-

(a) the appellant was denied the right to be heard.

(b) the trial judge erred in not properly interpreting and applying the terms of the employment agreement.

(c) the trial judge erred in relying on an invalid and non binding agreement in awarding damages.

Right to be heard

14. The appellant argues that the trial judge did not give the parties the right to be heard in respect to the presentation of oral submission and consequently it was denied a right to be heard. It relied on Jimmy Mostata Maladina v. Posain Poloh (2004) N2568 and Kumagai Gumi Co. Ltd v National Provident Fund Board of Trustees (2006) SC 837. These cases laid down the principle that litigants have a fundamental right to address the Court or be heard on any matter including submissions before a decision is made.

15. Clearly, this principle finds its origin in s. 59 of the Constitution which states:

"59. Principles of natural justice.

(1) Subject to this Constitution and to any statute, the principles of natural justice are the rules of the underlying law known by that name developed for control of judicial and administrative proceedings.

(2) The minimum requirement of natural justice is the duty to act fairly and, in principle, to be seen to act fairly."

16. The facts in Jimmy Mostata Maladina case (supra) are very similar to the present case. In that case a direction was issued by a Committal Magistrate for the prosecution and the defence to prepare and file written submissions and the matter was adjourned to a date to be fixed for the hearing of the submissions by another Committal Magistrate. Both the prosecution and the defence complied with the direction and filed their respective written submissions. When the matter returned before the Court for the hearing of submissions, the Committal Magistrate proceeded to pronounce his decision to commit the defendant to stand trial in the National Court without affording an opportunity to the parties to be heard on their written submissions.

17. After reviewing many past cases dealing with the rule or practice of parties filing written submission, the Court said:

"One thing about written submissions is clear – written submissions are not intended and should never replace, or be a substitute for oral submissions or hearing. Unless the parties with leave of the Court, expressly waive their right to be heard orally and agree to proceed by way of written submissions only, they should not be precluded, directly or indirectly, by the Court from exercising their right to make oral submission before the Court. It is a denial of a party's fundamental right to be heard on the matter before a decision is made, to stop him or his counsel from making oral submissions with or without written submissions having been filed, under S.96."

18. The principle in Jimmy Mostata Maladina (supra) was subsequently endorsed and approved by the Supreme Court in Kumagai Gumi Co. Ltd v National Provident Fund Board of Trustees (2006) SC 837. That was a case where the appellant appealed against entry of judgment, which the respondent obtained against it in the National Court. The relevant facts were that at the hearing before the National Court, the parties agreed (which was accepted by the Court) to only make submissions on legal issues or points of law for ruling by the Court. The submission on the facts and evidence in the affidavits were to follow after the determination of the legal issues. The National Court in its deliberations on the legal issues also proceeded to consider the affidavit evidence and consequently ordered judgment in favour of the respondent. The appellant appealed contending that there was a denial of its right to be heard in respect to the submission on the affidavit evidence. The Supreme Court agreed and said this:

"We accept submissions by Mr Webb of counsel for the Appellant, that there was a denial of natural justice to both parties, in particular the Appellant, in that they were denied the opportunity to address on the evidence. The right to be heard on the evidence before the Court considers the evidence is a fundamental requisite of the judicial process and the Court's failure to afford this right to the parties is a fundamental error."

19. In this case the facts in respect to this ground of appeal is not in dispute. After conclusion of the evidence at the trial, the parties agreed; and the Court directed; that written submission be filed by both parties; and the matter return before the Court on a date fixed for the parties to present oral submissions. When the matter returned on the time appointed or fixed; the trial judge's associate simply collected the written submissions from both counsel and brought them to the trial judge. There was no formal court hearing and both counsel did not present their oral submissions. The trial judge then proceeded to consider the matter and subsequently delivered a brief oral judgment in favour of the respondent, which is the subject of this appeal.

20. The respondent submitted that the trial judge afforded to the parties all the opportunity to make both oral and written submission and furthermore there was no need for the parties to reach agreement for written or oral submissions.

21. We agree with and accept the submission by the appellant that a fundamental error of law has been occasioned in this case where the parties and in particular the appellant's right to make oral submissions was denied when the trial judge failed to afford an opportunity to the parties to make oral submissions. The failure, in our view, constitute a fundamental procedural irregularity and therefore occasioned a substantial miscarriage of justice: Charles Bongapa Ombusu v The State (No. 1) [1996]PNGLR 335 SC496.

22. We uphold this ground of appeal.

23. In our view, this ground is a threshold issue, because the effect of our decision on this ground alone is sufficient to dispose of all other grounds of appeal and render them unnecessary for further consideration. It is determinative of all other grounds.

24. The question then arises as to whether the appeal should be remitted for retrial. We have found that the trial judge had committed a fundamental procedural irregularity. This Court has held that where a trial judge has erred procedurally, the appellate court may order that a new trial be conducted. See Charles Bongapa Ombusu v The State (No. 2) [1997]PNGLR 699; Gibson Gunure Ohizave v The State (1998) SC 595 and Fred Bukoya v The State (2007) SC 887.

25. One of the significant issues in the trial involved a determination as to the measure of damages. During the hearing, it became apparent to this Court that the validity of the redundancy, redeployment and retrenchment agreement 1997 is seriously in dispute. This agreement appears to be the basis on which the trial judge assessed and awarded the damages. We consider that the interest of justice require that the validity of the agreement should be properly determined after the hearing of evidence. In the circumstances, we will remit the matter for a re-trial.

26. Accordingly, the following will be orders of the Court:

1. The appeal is upheld.

2. The judgment of the National Court made on 2nd of May 2008 is quashed.

3. The award of damages made by the National Court is set aside.

4. The matter is remitted back to the National Court for rehearing before another judge.

5. The respondent is to pay the appellant's cost in the appeal to be taxed, if not agreed.

_____________________________________________________________
Bradshaw Lawyers: Lawyer for the Appellant
Konjib & Associates Lawyers: Lawyer for the Respondent