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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA NO. 57 OF 2021
BETWEEN:
DAVID WEREH, AS SECRETARY FOR DEPARTMENT OF WORKS
First Appellant
DEPARTMENT OF WORKS
Second Appellant
INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Appellant
AND:
JAMES WAMUK
Respondent
Waigani: Collier J, Kangwia J & Lindsay J
2023: 1st November
DAMAGES – assessment of damages – damages for wrongful termination of employment – whether appropriate damages awarded for stress and anxiety – whether out of pocket expenses properly awarded – appropriate interest rate ordered on damages found against the State pursuant to Judicial Proceedings (Interest on Debts and Damages) Act 2015 – appeal allowed in part.
Facts
The appellants appealed the primary Judge’s decision to award K30,000.00 for stress and anxiety to the respondent for wrongful termination of employment, to award damages of K20,000.00 for respondent’s out of pocket expenses, and in respect of the interest rate of 8% awarded by the primary Judge on those damages. The respondent had worked for the second appellant for 15 years, in 2003 his employment was terminated, but he was reinstated in 2006 and given compensation by the second appellant for time unemployed.
The appellants appealed the primary Judge’s decision on the basis that the respondent’s claim were not properly pleaded and/or insufficiently particularised, that there was little to no evidence adduced by the respondent to warrant the primary Judge’s orders for special damages, and that the primary Judge erred in respect of the interest rate ordered of 8%.
Held:
The Court found that the primary Judge erred in awarding damages to the respondent of K30,000.00 for stress and anxiety in the absence of pleading, particularisation or evidence. Nominal damages of K5,000.00 was appropriate. The Court upheld the primary Judge’s award of K20,000.00 for the respondent’s out of pocket expenses on the basis that the order was supported by adequate evidence. The primary Judge ordered the incorrect interest rate of 8%, when ss 2 and 4 of the Judicial Proceedings (Interest on Debts and Damages) Act 2015 provided that interest on damages payable by the State was not to exceed 2%. The appellant was ordered to pay the costs of the respondent in respect of the National Court proceedings. Each party was ordered to bear its own costs of and incidental to the appeal.
Cases Cited:
Aigilo v Morauta, Prime Minister (No 2) [2001] N2103
Benedict Petrus and Henry Gawi v Telikom PNG Limited [2008] N3373
Central Bank of Papua New Guinea v Tugiau [2009] SC1013
Curtain Bros (PNG) Ltd v UPNG (2005) SC788
Enei v Rimbunan Hijau Ltd [2011] N4402
Hodson v The State [1985] N524; [1985] PNGLR 303
Madring v Santi Forestry (PNG) Ltd [2015] N5908
Na-Al v Debege [2000] N1958
Papua New Guinea Banking Corporation (PNGBC) v Tole [2002] SC694
Rimbunan Hijau (PNG) Ltd v Enei [2017] SC1605
Tuman v Motor Vehicles Insurance Ltd [2017] N6923
Tuwi v Taiya [2010] N3901
Walup v National Housing Corporation [2019] N8065
Legislation:
Frauds and Limitation of Actions Act 1988
Judicial Proceedings (Interest on Debts and Damages) Act 1962 (Chapter 52)
Judicial Proceedings (Interest on Debts and Damages) Act 2015
Counsel
Mr R Uware and Ms E Wungim, for the Appellants
Mr L Giyomwanauri, for the Respondent
REASONS FOR JUDGMENT
1st November 2023
1. BY THE COURT: Before the Court is a notice of appeal filed on 16 June 2021 by the first, second and third appellants appealing the whole judgment of the primary Judge given ex tempore on 7 May 2021 in the National Court of Justice in Waigani in proceeding WS No. 198 of 2014. The primary Judge made the following orders:
2. The appellants rely on the following grounds of appeal:
(a) The learned trial judge erred in mixed law and fact and/or erred in the exercise of his discretion by awarding general damages inclusive of special damages by allowing:-
- (i) General Damages for stress and anxiety which were matters to be proven by medical evidence which in this case evidence was lacking or not adduced to prove the case beyond the balance of probabilities,
- (ii) Out of pocket expenses from the filing of the proceeding on 17th March 2014 to date of trial on 20th November 2020 which were not adequately pleaded particularising the expenses incurred, and
- (iii) Failed to prove out of pocket expenses with receipts of expenses incurred.
(b) Although the trial judge noted the Judicial Proceedings (Interest on Debts and Damages) Act 2015 (2015 Act), he awarded interest at eight (8) percent on the reason that there was nothing wrong in awarded interest at eight (8) percent despite section 2 of the 2015 Act which provided that all decisions made on or after 1st January 2014 were governed by the 2015 Act which in effect meant that the awarding of eight (8) by the trial judge was erroneous.
(c) The learned trial judge with respect wrongly exercised his discretion by applying interest at eight (8) percent as against the state and its servants, agents and entities as provided by section 1(2) and 3(4) of the Judicial Proceedings (Interest on Debts and Damages) Act 1962 (Chapter 52) which was replaced by the 2015 Act,
(d) The learned trial judge erred in law or wrongly exercised his discretion in awarding interest at eight (8) percent by ignoring the fact that the State was a defendant in the proceedings below and the other defendant in the proceedings below and the other defendants were agents, servants or entities of the State and as such the appropriate rate of interest allowable was two (2) percent in accordance with Part II, particularly sections 4 and 6 of the 2015 Act.
3. The Appellants seek the following relief:
(i) The appeal is allowed.
(ii) The order of the National Court made on the 7th May 2021 be quashed or set aside.
(iii) The National Court proceeding is dismissed in its entirety.
(iv) The matter remitted to the National Court for a rehearing or
(v) Court to reassess the damages and make appropriate orders.
(vi) Any or further orders the Court deems fit or appropriate.
(vii) Costs of this appeal to be met by the Respondent.
BACKGROUND FACTS
4. In the National Court proceeding on 10 August 2020 the parties filed a Statement of Agreed and Disputed Facts and Legal Issues for Trial. The facts set out below are not controversial.
5. The respondent was first employed by the Department of Works on 24 August 1988 as a casual worker. In his employment he was described as a crusher/plant operator. The nature of his work resulted in him being posted to a number of provincial centres or towns. Between 1988 and 1995 he was posted to Mt Hagen, then Chimbu from 1995 to 1997. His last posting was in Wewak, East Sepik Province from 1997 to 2003.
6. In Wewak the appellant was seconded to Shorncliffe PNG Limited, a civil engineering and road construction company. It appears that the secondment was made possible by an agreement between the Department of Works and Shorncliffe PNG Limited. In 2003 while he was at Shorncliffe PNG Limited the appellant’s position was terminated by the Department of Works.
7. The respondent complained to the Public Services Commission (PSC) about his termination. During the investigation the PSC annulled the respondent’s termination, and on 19 January 2006 recommended that he be reinstated.
8. Following his reinstatement the respondent received K26,200.12 in lost salary. In April 2008 he received a further amount of K82,270.24 for loss of salary.
9. The respondent claimed in the primary decision that in light of his employment with the Department of Works for 15 years as a casual worker, Public Services General Orders 7 was breached. This Order provides that a person cannot be employed as a casual worker for longer than three months.
PRIMARY DECISION
10. Before the primary Judge the respondent relied on an Amended Statement of Claim which relevantly provided as follows:
...
(reproduced from original)
11. The primary Judge found that the respondent was time barred under section 16(1) of the Frauds and Limitation of Actions Act 1988 for some of the relief sought, as he was claiming for damages which may have arisen before 17 March 2008 in circumstances where the writ was issued on 17 March 2014.
12. At the hearing the appellants sought to rely, inter alia, on the affidavit of Mr Mathew Michael, the manager for Industrial Relations Section at the headquarters of the Department of Works and Implementation at Boroko National Capital District, sworn on 4 December 2019. The respondent at the hearing took issue with that affidavit on the basis that its contents ought to have been raised in the Defence, not in the form of an affidavit. The primary Judge ruled that the affidavit of Mr Mathew Michael should not be admitted.
13. The primary Judge acknowledged that the respondent’s eligibility for permanency was well overdue, and there was no explanation for the failure of the appellants to make him a permanent public servant until late 2008.
14. His Honour referred to the case of Benedict Petrus and Henry Gawi v Telikom PNG Limited [2008] N3373 at [5], where Cannings J held that employment of workers as casual employees for lengthy periods breached their rights to employment and was harsh and oppressive under s 41 of the Constitution. Justice Canning held that a person denied permanency in the Public Services for a long period was entitled to claim damages.
15. The primary Judge applied those principles to the circumstances of this case, and found that the claim for damages for frustration, anxiety and distress was properly grounded. His Honour found a fair amount of compensation for the appellant was K30,000.00.
16. Many of the expenses claimed in the affidavits relied on by the respondent were time barred because they were incurred six years before these proceedings. The primary Judge found that the expenses incurred were only generally pleaded and not particularised. Those claims included claims for accommodation, plane tickets, legal costs, debt owed, and others.
17. The primary Judge observed that a claim of special damages must be properly pleaded and particularised.
18. His Honour referred to comments of Kandakasi J in PNGBC v Jeff Tole [2002] SC694:
The law on pleadings in our jurisdiction is well settled unless there is foundation in the pleading of a party, no evidence of matters not pleaded can be allowed.
19. His Honour found that pleadings must be clear and unambiguous, such that defendants are fully informed of what is claimed and what is defended. Affidavits and other forms of evidence given at the trial must therefore be based on the pleadings of matters.
20. The primary Judge found that even though the respondent was time barred and had not particularised his expenses in the pleadings, it could not be denied that the respondent had incurred out of pocket expenses in prosecuting his claim from 17 March 2014 until the commencement of the hearing on 20 November 2020. However a determination could not be made on the respondent’s out of pocket expenses because of the general claim for special damages in the amended statement of claim.
21. The primary Judge found that the respondent would have made phone calls to the relevant people regarding this case, fuel to go to and from Court to file documents, serve documents, travel to his lawyers for conferences, travel to court to observe proceedings and so on. There would have been public transport or taxi fares, possibly photocopying documents and so on.
22. Finally, the primary Judge held that given the circumstances of the case, his Honour would award K20,000.00 for special damages referable to out of pocket expenses.
23. The next issue for consideration by his Honour was interest on the damages. His Honour identified that the proceeding was issued on 17 March 2014, which was before the 2015 amendment to the Judicial Proceedings (Interest on Debts and Damages) Act which limited interest to 2%. His Honour took the view that, because the proceeding was commenced prior to the amendment, damages be awarded on the basis of 8% interest for the period between commencement of the proceedings and the trial.
SUBMISSIONS
24. The appellants in summary submitted as follows:
25. The respondent in summary submitted as follows:
CONSIDERATION
26. The appellants grouped their grounds of appeal in two separate questions as follows:
(1) Whether the primary Judge properly used his discretion in assessing special damages as there was no proof and no particularisation for out of pocket expenses and mental consequences; and
(2) Whether the primary Judge correctly awarded interest at 8%.
Assessment of special damages
Stress and anxiety
27. Stress and anxiety are a recognised head of damages in Papua New Guinea: see for example Hodson v The State [1985] N524, Na-Al v Debege [2000] N1958, Aigilo v Morauta, Prime Minister (No 2) [2001] N2103, Papua New Guinea Banking Corporation (PNGBC) v Tole [2002] SC694. Having said that, stress and anxiety must be properly pleaded and, if necessary, particularised. It must also be supported by evidence substantiating the damage claimed.
28. In the National Court proceeding the respondent swore an affidavit on 30 October 2018 in which he relevantly deposed as follows:
29. A decision of the Supreme Court directly on point is Central Bank of Papua New Guinea v Tugiau [2009] SC1013. In that case the Supreme Court observed:
55. The final matter we turn to is the award of "K50,000.00 for stress, anxiety and loss of reputation in the bank and amongst his peers." Traditionally, the law did not and does not compensation of any disappointment and hurt feelings which ordinarily follow any termination of employment. The law has now developed to a point where the Courts have been awarding damages for such things as stress, anxiety and defamation of character or loss of reputation. This can only happen in cases where a plaintiff, first properly pleads the loss or damage with the relevant particulars and then establishes it by appropriate evidence at the trial. The evidence must establish actual damage being suffered, for example serious negative impact on ones health or not being able to secure alternative employment because of any unlawful and baseless attacks and injury to ones reputation or character. This ties in well with the accepted principles governing the assessment and allowance of damages as we have earlier noted, that is to say, a plaintiff can only be compensated by way of damages for loss or damages actually suffered. It follows therefore that, damages cannot be allowed as a matter of cause but only actual losses and damages which are clearly pleaded and established by appropriate evidence as was the case in Peter Aigilo v. The Independent State of Papua New Guinea.
56. In this case, the plaintiff did not plead with any particularity his claim of having suffered stress, anxiety and loss of reputation in the Bank and amongst his peers. He only pleaded in the prayer for relief "damages for psychological effects, stress, embarrassment, shame, defamation of his good reputation and character." That was no pleading at all. The law is clear that, foundation must be laid in the pleadings to properly ground any prayer for relief. Without any such pleadings there can be no award.
57. The Supreme Court emphasized the importance of proper pleading and made the point we have just made clear in the Jeff Tole case. In that case, there was a lack of proper and sufficient pleading even though some things where pleaded and there was an indication in the statement of claim that, further and better particulars will be provided prior to or at the trial. The Court was of the view that, such a pleading was no pleading at all. The Court made it clear also that, the rules and hence the case law that has built around them, requires proper pleading before there can be any award of damages.
58. Having failed to properly lay a foundation in his pleadings for his claim for "damages for psychological effects, stress, embarrassment, shame, defamation of his good reputation and character" Mr. Tugiau did not produce any evidence at the trial of what damages if any he in fact suffered. He produce for example, no medical evidence clearly establishing the kind of psychological effects and stressed he may have suffered. Similarly, he did not produce any evidence of what if any damage was done to his character or reputation generally or amongst his peers and the Bank. Instead, there was no contest between the parties that, by order of the Court, Mr. Tugiau was entitled to reinstatement. That restored his good standing before his peers and the Bank. However, Mr. Tugiau chose not to be reinstated as he had secured alternative employment. The fact that he secured alternative employment was indicative of his dismissal by the Bank having no adverse impact on his reputation as a trustworthy employee and his ability to secure alternative employment.
59. In short we note that Mr. Tugiau failed to properly and sufficiently plead his claim for damages for psychological effects, stress, embarrassment, shame, defamation of his good reputation and character. We also note that, Mr. Tugiau failed to establish by any evidence his claim for damages for psychological effects, stress, embarrassment, shame, defamation of his good reputation and character. Consequently, with the greatest respect, we find that, the learned trial judge had no proper basis or foundation both in law in fact to arrive at the decision to award K50,000.00 for stress, anxiety and loss of reputation in the bank and amongst peers.
(emphasis added)
30. In the present case the respondent relevantly pleaded:
31. To adopt the language of the Supreme Court in Tugiau, the respondent in the Amended Statement of Claim did not plead with any particularity his claim of having suffered stress or anxiety. He only pleaded in the prayer for relief special damages for stress and anxiety incurred in the years he was terminated from employment. As the Supreme Court observed in Tugiau, that was no pleading at all – the law is clear that proper foundations must be laid in the pleadings to properly ground any prayer for relief.
32. Further, the respondent did not produce any evidence at the trial of damage – if any – he in fact suffered, including for example medical evidence clearly establishing the kind of psychological effects he may have suffered from his claimed stress and anxiety. The decision at first instance can, for example, be contrasted with the decision of Kandakasi J (as his Honour then was) in Aigilo v Morauta, Prime Minister (No 2) [2001] N2103 where medical evidence of the plaintiff was produced demonstrating that the loss of his employment contributed to a serious medical condition.
33. With the greatest respect we find that the learned primary Judge had no proper basis or foundation either in law or in fact to arrive at the decision to award the respondent K30,000.00 for stress and anxiety.
34. In relation to a claim for stress and anxiety not otherwise demonstrated by evidence the authorities indicate that an amount of nominal damages for stress and anxiety is in the region of K5,000.00: see for example Walup v National Housing Corporation [2019] N8065 (K5,000.00) and Madring v Santi Forestry (PNG) Ltd [2015] N5908 (K4,000.00). The appellants submitted that the primary Judge should have made no award for stress and anxiety at all, or should have made an award of nominal damages of less than K5,000.00. In our view the amount of K5,000.00 for stress and anxiety is appropriate in the present case.
Out of pocket expenses
35. The primary Judge found that the respondent was entitled to claim out of pocket expenses of K20,000.00. In so finding his Honour had regard to receipts of expenditure incurred by the respondent after 2014, produced by the respondent, and annexed to affidavits filed by the respondent in the National Court proceedings. We also note that the respondent in the Amended Statement of Claim pleaded as follows:
(emphasis added)
36. There is clear authority that the National Court can award special damages including out of pocket expenses. In Tuman v Motor Vehicles Insurance Ltd [2017] N6923 Liosi AJ (as his Honour then was) observed:
37. In Tuwi v Taiya [2010] N3901 Makail J said:
38. In Enei v Rimbunan Hijau Ltd [2011] N4402 Gavara-Nanu J relevantly said:
Special damages
"General damages are such as the law will presume to be the direct natural or probable consequence of the action complained of. Special damages on the other hand, are such as the law will not infer from the nature of the act. They do not follow in ordinary cause. They are exceptional in character and therefore they must be claimed and proved strictly."
39. The decision of the National Court in Enei was upheld by the Supreme Court in Rimbunan Hijau (PNG) Ltd v Enei [2017] SC1605 (see in particular paras [64]-[65]).
40. The appellants submit that the primary Judge erred in allowing the respondent to claim expenses of K20,000.00 because such expenses were not properly pleaded or strictly proven. Paragraph [18] of the Amended Statement of Claim pleaded expenses incurred by the respondent, and this aspect of the claim, while not particularised, was supported by evidence in the form of the affidavits of the respondent and the material annexed thereto. The primary Judge was clearly in a position to have regard to that evidence, and plainly did so selectively and properly by reference to expenses incurred after 2014. We are unable to conclude that his Honour erred in awarding the respondent the sum of K20,000.00 by reference to the expenses incurred by the respondent in the proceedings.
Interest
41. Section 2 of the Judicial Proceedings (Interest on Debts and Damages) Act 2015 provides:
This Act applies to all Court Orders made against the State on or after 1 January 2014.
42. Further, s 4 of the 2015 Act provides:
4. PRE-JUDGMENT INTEREST ON DEBTS AND DAMAGES.
(1) Subject to Section 5, in proceedings in a court for the recovery of a debt or damages, the court may order a rate as it thinks proper to be applied to the sum for which judgment is given interest, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.
(2) Where the proceedings referred to in Subsection (1), including proceedings arising out of a breach of express or implied contract or mercantile usage, are taken against the State, the rate of any interest under that subsection shall not exceed 2% yearly.
(3) The maximum rate of interest in Subsection (2) applies notwithstanding that the proceedings against the State arose out of a breach of express or implied contract or mercantile usage and the relevant interest rate in the contract or mercantile usage is higher than 2%.
(4) A judgment entered contrary to Subsections (2) and (3) is a nullity and is liable to be set aside and re-issued according to law by the same judge or judges on application -
(a) by the lawyer for the State; or
(b) by the registrar, clerk or other proper officer of the court by which the judgment is given; or
(c) by any party to the proceedings.
43. In the present case it is clear that the proceedings commenced by the respondent against the appellants in WS No 198 of 2014 were taken against the State of Papua New Guinea. The orders of the primary Judge were made on 7 May 2021. The respondent submitted that the 2015 Act did not apply because the respondent commenced the proceedings in the National Court prior to the commencement of the 2015 Act, and because his Honour was entitled to exercise his discretion in awarding interest. However, the terms of s 2 of the 2015 Act are clear and unambiguous. The 2015 Act applies to all Court orders made after the commencement of the 2015 Act, not only to proceedings commenced after the commencement of the 2015 Act. To the extent that the primary Judge took the view that interest at 8% accrued from the date of issuance of proceedings in 2014 to the date of trial, his Honour was incorrect in circumstances where the order of the Court was made after the commencement of the 2015 Act. Section 4 of the 2015 Act plainly applied, such that interest could be awarded by the National Court against the appellants in this proceeding only at a rate not exceeding 2%.
44. The order of his Honour that interest at 8% be awarded must be set aside.
COSTS
45. The appellants have been partly successful in this appeal, namely in relation to the assessment of damages for stress and anxiety, and in relation to the rate of interest. However we are satisfied that the respondent can properly be awarded special damages for stress and anxiety, although reduced from the amount ordered by the primary Judge. We also consider that interest ought to be paid on the special damages awarded, although again at a reduced rate of 2%.
46. In our view the appropriate costs order is that:
47. The Court orders that:
(1) The appeal be allowed in part.
(2) The orders of the National Court of Justice at Waigani of 7 May 2021 in WS No. 198 of 2014 be set aside.
(3) The respondent be awarded special damages in an amount totalling K25,000.00 representing:
- (a) Damages for stress and anxiety: K5,000.00.
- (b) Payment of out of pocket expenses: K20,000.00.
(4) The respondent be awarded interest on the special damages referred to in paragraph (3) of these Orders at the rate of 2% pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act Chapter 52 (as amended) from the date of commencement of the proceedings in WS No 198 of 2014 in the National Court of Justice, to the date of these Orders.
(5) The appellants pay the costs of the respondent of and incidental to the National Court of Justice proceedings in WS No. 198 of 2014, such costs to be taxed if not otherwise agreed.
(6) The parties bear their own costs of and incidental to this appeal.
________________________________________________________________
Solicitor-General: Lawyers for the Appellants
Mr L Giyomwanauri: Lawyer for the Respondent
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