Air Niugini Ltd v Piokole [2019] PGSC 43; SC1812 (25 April 2019)

SC1812

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 83 of 2017

BETWEEN:
AIR NIUGINI LIMITED
First Appellant

AND:
REI LOGONA
Second Appellant

AND:
CLARK PIOKOLE
First Respondent

AND:
AIRLINE PILOTS ASSOCIATION
Second Respondent

AND:
PNG NATIONAL PILOTS UNION
Third Respondent

SCR 87 of 2017

APPLICATION FOR LEAVE TO REVIEW PURSUANT TO S. 155 (2)(b) CONSTITUTION

BETWEEN
CLARK PIOKOLE
First Applicant

AND:
NATIONAL AIRLINE PILOTS UNION
Second Applicant

AND:
AIRLINE PILOTS ASSOCIATION
Third Applicant

AND:
REI LOGONA
First Respondent

AND:
AIR NIUGINI LIMITED
Second Respondent

Waigani: David J, Hartshorn J, Yagi J.
2017: 11^th December
2019: 25^th April

Appeal and Review

Cases Cited

Peter Condon v. National Airlines Commission [1978] PNGLR 1
Simon Mali v. State (2002) SC690
Tigam Malewo v. Keith Faulkner (2009) SC960
Wandiago Kau v. State (2016) N7010
Timothy Kambao v. Mark Yakka (2016) N6514
Amos Ere v. National Housing Corporation (2016) N6515
Keith Borok v. Ok Tedi Mining Ltd (2017) N7087

Counsel

SCA 83 of 2017

Mr. I. Shepherd and Mr. C. Joseph, for the Appellants
Mr. M. Murray, Mr. O. Dekas and Ms. L. Ipato, for the Respondents

SCR 87 of 2017

Mr. M. Murray, Mr. O. Dekas and Ms. L. Ipato, for the Applicants
Mr. I. Shepherd and Mr. C. Joseph, for the Respondents

25^th April, 2019

1. BY THE COURT: This is a decision on an appeal and also a review of a National Court judgment given in respect of employment contracts which Air Niugini Ltd, the first appellant in the appeal (Air Niugini), had with its pilots in 2012 and 2015. The National Court delivered judgment and made orders (subject decision) which are amongst others, as follows:

a) the 2015 Contracts were unlawful, invalid and void ab initio;

b) the 2012 Contracts were current and that Air Niugini reverse its actions based on the 2015 Contracts;

c) damages for stress and anxiety be assessed for Clarke Piokole, the first respondent in the appeal, and pilots who are members of the PNG National Pilots Union, the third respondent in the appeal (Union).

2. Air Niugini and Mr. Rei Logona, the second appellant in the appeal, appeal the subject decision. Mr. Piokole, the Airline Pilots Association, the second respondent in the appeal (Association), and the Union, apply to review the subject decision. Leave to appeal and leave to review the subject decision have been granted. The review will only require this court’s consideration if the appeal is unsuccessful. We consider the appeal first.

Background

3. The appellants’ submit that the background of the matter is amongst others,
as follows:

a) Air Niugini operates a commercial airline known as Air Niugini. Mr Piokole was employed by Air Niugini as a National pilot until 31^st December 2014;

b) The Association is an industrial Association whose members are Papua New Guinea expatriate air pilots. The Union is an industrial Association whose members are Papua New Guinea National air pilots;

c) Prior to 1^st January 2015 Air Niugini’s pilots were employed under individual contracts and on different terms according to whether they were Nationals or expatriates. Although each pilot was employed under an individual employment contract, the terms of employment were standard according to whether the pilot was a National or an expatriate. The standard terms had been agreed between Air Niugini, the Union and the Association;

d) Air Niugini wished to standardise its pilots’ terms of employment by removing the distinction between a National and an expatriate pilot, and by reducing its expenditure;

e) Meetings were held between representatives of both Air Niugini and its employed pilots between about July and December 2014 to negotiate standard terms of employment from 1^st January 2015. Following these meetings, Air Niugini made offers of employment to each of its employed pilots. These offers were open for acceptance until 31^st December 2014.

f) Mr. Piokole was the only employed pilot, apart from those who did not wish to continue to be employed by Air Niugini at all, who refused to accept Air Niugini’s offer of employment. Otherwise, the pilots each signed the 2015 contracts and were employed on their terms from 1^st January 2015. The 2015 contracts were expressed to expire on the 31^st March 2017.

Grounds of Appeal

4. The appellants’ grounds of appeal concern:

a) the proper parties to the National Court proceeding and their right to claim;

b) the correct interpretation of the 2012 contract and whether there was a breach as alleged;

c) the remedy for breach of a contract of employment, if such a breach occurred;

d) that only the claim of duress could have vitiated the 2015 contract, but there was no evidence of this. The other findings concerning the 2015 contract were not issues between the parties, were not supported by the evidence and were not grounds for setting aside;

e) the finding that by becoming members of the union, an employee loses his personal capacity to contract;

f) the finding that Air Niugini’s conduct was contrary to the spirit and intent of the Constitution and worldwide industrial legislation;

g) the award of costs against Mr. Logona.

Parties to the National Court proceeding

5. Air Niugini submits that Mr. Piokole, a pilot, was the only party that had standing to seek the relief that was claimed in the proceeding. The Union and Association did not have standing as although they are legal entities, they do not have standing to bring claims that are personal to their members, for example, for breach of contract or alleging duress.

6. Mr. Piokole and the other pilots were each employed under individual employment contracts. The terms of those contracts were negotiated by the Union and Association, but the Union and Association were not parties to the individual contracts between Air Niugini and the respective pilots. There was no industrial award, and in the absence of an industrial award or as parties to a contract the Union and Association have no standing to bring any personal claims on behalf of their members. Further, the proceeding was not brought by any party as a representative proceeding pursuant to Order 5 Rule 13 National Court Rules and in accordance with the requirements for such actions. The only matter properly before the National Court was Mr. Piokole’s claim which was for breach of contract of his 2012 contract.

7. The Union and the Association submit that they both were given leave to join the proceeding, that the primary judge did not fall into error by amongst others, not finding that the pilots employed by Air Niugini were at all material times employed under individual contracts of employment, and in finding that Air Niugini’s employed pilots who were members of the Union and the Association became parties to the Contracts/Agreements made between Air Niugini and the Union and the Association, instead of finding that the pilots were employed on individual employment contracts.

Consideration

8. The 2012 Contract between Air Niugini and the Union dated 1^st January 2012 was only between those two parties and was only signed on behalf of those two parties. The pilots, whether National or expatriate, were employed on individual employment contracts. That was the evidence and it was also an agreed fact between the parties. The Union and Association were not parties to the individual contracts between Air Niugini and each of its pilots. The Union and Association merely negotiated the terms of the individual contracts. For the Union and Association to bring proceedings on behalf of each pilot in respect of each individual contract with Air Niugini, representative proceedings pursuant to Order 5 Rule 13 National Court Rules should have been brought, and in accordance with the requirements of such actions. We refer in this regard to the Supreme Court cases of Simon Mali v. State (2002) SC690 and Tigam Malewo v. Keith Faulkner (2009) SC960. See also Wandiago Kau v. State (2016) N7010; Timothy Kambao v. Mark Yakka (2016) N6514; Amos Ere v. National Housing Corporation (2016) N6515; Keith Borok v. Ok Tedi Mining Ltd (2017) N7087.

9. That the Union and Association were given leave to join the proceeding did not in some way grant them standing to bring claims on behalf the pilots. As a representative proceeding was not brought by the Union and Association, the Union and Association did not have the necessary standing to bring claims that were personal to their members. The only matter that was properly before the National Court therefore was the claim of Mr. Piokole which was for an alleged breach of his 2012 contract of employment with Air Niugini.

10. Given the above, to the extent that the primary judge made findings and orders otherwise, we are of the respectful view that the primary judge fell into error.

Whether members of a union forfeit their rights to negotiate or contract

11. A further matter requiring comment is in regard to the statement of the primary judge that when an employee becomes an individual member of a union he or she surrenders their right to negotiate directly with their employer and instead their union is to represent the employee in all matters concerning the employment of the employee against the employer.

12. Section 44(2)(b) Industrial Relations Act is as follows:

“(2) Subject to this Act—

(a) a registered award or a registered determination of the Minimum Wages Board is binding on the employers and employees to whom it relates; and

(b) as from the date specified in the award or determination or, if no date is specified, the date of publication of the notice under Section 43 in relation to the award or determination—it is an implied term of the contract between the employers and the employees to whom it relates that the wages to be paid and the conditions of employment to be observed under the contract are in accordance with the award or determination until varied by a subsequent registered award or registered determination.” (emphasis added)

13. This section recognises, as submitted by the appellants, that employees, whether members of a union or not, do not forfeit their rights to negotiate or contract. If there is an award then the employer cannot contract on terms less favourable than those contained in the award. The parties are free to contract otherwise. If there is a breach of the employment contract, the employee or employer commences the proceedings. That this is so is demonstrated by there being numerous examples of individual employees bringing claims against employers whether in court or under the Industrial Relations Act: Peter Condon v. National Airlines Commission [1978] PNGLR 1.

Conclusion

14. The orders that were made by the primary judge are two declarations and consequential orders. They were made on the basis amongst others, that the Union and Association had the requisite standing, which they did not. The appeal should be allowed on this basis alone. Further, from a perusal of the pleadings, the evidence, the transcript of the hearing before the primary judge and the submissions of the parties, it is clear that amongst others, the primary judge considered and made findings on matters that were not pursued or claimed by the respondents. The foregoing necessitates that the appeal be allowed.

Orders

15. It is ordered that:

a) This Appeal is allowed;

b) The Review did not require consideration by virtue of the Appeal being allowed, and is therefore dismissed;

c) The Orders of the National Court made on 15^th May 2017 in proceeding OS 6 of 2015, Waigani, are quashed and in lieu thereof the respondents’ claims in the National Court are dismissed;

d) The respondents’ shall pay the appellants’ costs of and incidental to the appeal, including the Application for Leave to Appeal and the costs of the National Court proceeding;

e) The costs of the Review shall be costs in the cause.
_________________________________________________________________
SCA 83 of 2017
Ashurst Lawyers: Lawyers for the Appellants
Murray & Associates: Lawyers for the Respondents

SCR 87 of 2017
Murray & Associates: Lawyers for the Applicants
Ashurst Lawyers: Lawyers for the Respondents