DC525

PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE
SITTING IN ITS GRADE FIVE CIVIL JURISDICTION]

GFCi 48 of 2006

BETWEEN

ARE NOEL
Complainant

AND

MARK KLEEMAN
First Defendant

AND

BIRD OF PARADISE HOTEL LTD
Second Defendant

Goroka: M Gauli
2007: February 14, 28; March 23, 30; April 05

CIVIL - Damages – Lawful termination – Security officer – Failed to perform duty – Oral contract of service – No clear pleadings for damages. 

Cases Cited
Reid –v- Baldwin [1964] AC, 40 at 65
Steamships Trading Co. –v- Joel [1991] PNGLR 133
Jimmy Malai –v- PNG Teachers Association [1992] PNGLR 568
Paddy Fagon –v- Negiso Distributors Pty Ltd N1900 WS. No 589 of 1995
Okuk –v- Fallscheer [1980] PNGLR 274
Robinson –v- National Airlines Commission [1983] PNGLR 476
Apa –v- Wama & ORS [1992] PNGLR 395

References
1. Employment Act, Ch. 373, ss. 15 – 17, 33 – 36 

Counsel
Mr. K. Pilisa - For the Complainant
Mr. A. Poya - For the Defendants 

05 April 2007

DECISION OF THE COURT

M Gauli, PM: The Complainant in this action claims damages against the defendants for unlawful termination of a contract of his employment on 23rd of June 2006. The Complainant was employed by the Second Defendant the Bird of Paradise Hotel Limited on 16 November 1998 as a security guard until his termination. The Defendants deny liabilities. 

2. The evidence in this trail was both by affidavits and oral and the witnesses were cross-examined by the opponents. The Complainant has only himself as the witness while for the Defendants the First Defendant is the only witness called. The First Defendant Mr. Mark Kleeman is the Manager of the Second Defendant which conduct its hotel business in Goroka town.

3. The facts which lead to the Complainant’s termination are these. On the evening of the 23rd June 2006, the Complainant was on duty manning the front entrance of the Hotel. Two former employees of the hotel came to the reception area and one of them knocked over a flower vase therein and it broke into pieces. The two former employees were John Kesie and Richard Peter. At the sound of the falling flower vase the Complainant’s attention was drawn so he went over to the reception area. He told the receptionist Peter Bayak to ring the police. The two former employees then were leaving the reception area and followed their way out to the back car part gate of the hotel. And the Complainant followed them.

4. The receptionist Peter Bayak came after them, and held John Kesie by hand and said to the former employees “What is the matter with you”. They replied “We have a problem with the manager”. John Kesie then shrug of Peter Bayak’s hand and in so doing he hit Peter on the face. Peter Bayak retaliated and punched down John Kesie. In that fight Peter Bayak sustained a cut on his face. The former employees then left the hotel through the back gate. The Complainant just stood there watching, he did nothing to stop the fight. The facts formed the complainant's evidence.

5. Soon after that incident Peter Bayak reported to the Manager, the First Defendant, who was having his dinner at the Hotel’s restaurant deck. He then made inquiries from Peter Bayak, the trainee receptionist namely Daniel and the Complainant. The Complainant just put his head down and said nothing. Next morning on 24th June 2006 when the Complainant came to work, the Manager (First Defendant) told him that he is terminated.

6. The facts above are not disputed. The complainant claims that there was no proper notice given therefore his termination was unlawful. And he claims damages in the sum of K10, 000.00. These therefore gives rise to two main issues, and these are:

i. Whether the Complainant was unlawfully terminated.
ii. If so then is he entitled to damages.

7. I have read the submissions of both parties which will be considered as I discuss the issues. 

8. Issue No. 1: Whether the Complainant was unlawfully terminated.

The law applicable in cases of unlawful termination of employment is the Employment Act, Chapter 373. Under this law a contract of employment can be made either oral or written. In the present case this was an oral contract of employment and he was receiving fortnightly wages since his employment. The terms of an oral contract and its termination are stated under the Sections 15, 16, 17, 33, 34, 35, 36 of the Employment Act. 

9. Section 15 of the Act requires the employer to make a written record of the terms and conditions of the oral contract the parties have entered into, (S. 15 (1) of the Act). If a disputed arise regarding the terms and conditions of oral contract and if the employer does not produce such records the statement by the employee as to the terms and conditions of the contract shall be conclusive evidence of those terms and conditions. There is no evidence from either the complainant or the defendant as to the terms and conditions of the oral contract of employment. That been the situation, I will not apply Section 15 of the Act here as to what the terms and condition of the contract were.

10. The period of oral contract of employment is determined by reference to which wages are paid – pursuant to Section 16 of the Act. In the present case the complainant was paid fortnightly wages and where the wages of the oral contract of service are paid fortnightly, the parties are deemed to have entered into a new oral contract of service immediately on the expiration of the contract, unless a Section 34 notice is given to terminate the contract or if the contract is summarily terminated by one of the parties on lawful ground – pursuant to Section 17 of the Act.

11. Where the period of a contract of service is not been specified, that contract is deemed to continue until it is terminated by either of the contracting party (S. 33 (2) of the Act). The employer may terminate the contract of the employee by either giving Section 34 notice or by payment in lieu of notice. Where Section 34 notice is required, the length of notice required to b e given depends on the period the employee had worked, pursuant to Section 34 (4) of the Act.

12. In the present case the Complainant was in employment with the defendant Hotel for over seven years. So the period of notice required to terminate the Complainant was four weeks. I find that the Defendants failed to comply with the Section 34 (4) of the Act. This is a serious breach.

13. A contract of service can however be terminated without notice pursuant to Section 35 of the Act. This can be done where both parties agreed that a termination notice is not required. There is no evidence before the Court that the defendant could terminate without notice. I find that the defendants could not be protected by Section 35 of the Act.

14. Section 36 of the Act provides the grounds upon which the employer may terminate the contract of service without notice or by payment in lieu of notice. Such grounds include – wilfully disobeying lawful and reasonable orders, misconduct, guilty of fraud or dishonesty, habitual neglect of duty, continued absent from duty without leave or excuse or being imprisoned for seven years. There is evidence that the complainant was on two previous occasions been warned for breaching the Company’s laws. Once he left his place of duty without letting anyone know and on the other occasion he failed to report an incident to a duty manager. I find that this amount to neglectful of his duties. Subsection (3) of Section 36 of the Act empowers the employer to terminate the contract of service without notice as soon as practicable from the time the event occurs.

15. The relationship between the defendant and the complainant is one of employer and employee relationship. And at common law the principle of the employer’s right to hire and fire applies in Papua New Guinea. In Reidge –v- Baldwin [1964] AC 40 at 65 Lord Redi said:

“The law regarding master and servant is not in doubt. There cannot be specific performance of a contract of service and the master can terminate the contract with his servant at anytime for any reason or none. But if he does so in a manner not warranted by the contract he must pay damages for breach of contract. So the question in a pure case of master and servant does not at all depend on whether the master heard the servant in his defence, it depends on whether the facts emerging at the trial prove breach of contract”.

16. This common law principle was applied in our jurisdiction in a number of cases including Steamships Trading Co. –v- Joel [1991] PNGLR 133 and Jimmy Malai –v- PNG Teachers Association [1992] PNGLR 571. It was held in these case laws that:

“The common law principle that an employer may terminate the services of an employee at will applies in PNG subject to the requirement of notice or payment in lieu of notice contained in the Employment Act”.

17. And in the case of Paddy Fagon –v- Negiso Distributors Pty Ltd N1900 (Unreported) WS No. 589 of 1995 His Honour Kiriwon J said: 

“Under Common law a master does not have to give reasons for his decision to remove a servant and to replace one with another. That is his unfettered discretion and the Common law respects. Common law is part of the under-lying law in Papua New Guinea which was adopted on Independence and over the years since the Courts in this jurisdiction have adopted and cherished this Common law principle”.

18. The counsel Mr. K. Pilisa for the Complainant referred to the case of Okuk –v- Fallscheer [1980] PNGLR 274 in which Greville Smith J (as then he was) applied the national from the English case:

“- - - the importance of Ridge –v- Baldwin, both generally and in respect of matters falling to be decided on the demurer now before this Court lies in the further reasons given by Lords Reid, Morris and Hudson for holding the committee’s decision to be invalid, namely that even in the absence of the fettering of the disciplinary power by the procedural code it would still have been exercised invalidly because there had been a disregard of the rules of natural justice, in that he had been given no notice of charges laid against him and no opportunity to be heard. It was held in effect that a duty to observe the rules of natural justice to the extent of giving him an opportunity to be heard arose by implication from the nature of the power conferred”.

19. In Okuk –v- Fallscheer the National Airlines Commission Act 1973 requires the Minister to give the general Manager the reasons for his dismissal and an opportunity to be heard in his own defence before terminating the employee. The Airlines Act did not contain the requirement of natural justice such as the right to be heard such as audi alteram partem rule. The Employment Act 1978 is also silent on the audi alteram partem rule but Section 6 (a) of the Act does not relieve the employer of any duty or liability imposed on him by any other law in force in Papua New Guinea or limit or restrict any powers given to any officer by any other law in force in Papua New Guinea”. One such law in force in PNG is the Constitution of PNG and particularly to Sections 37 (4) (6) (c), 41 (1) (a) (b) (c) and 59.

20. The S. 37 (4) of the Constitution is not applicable to the present situation since the Complainant is not appearing before this Court for a Criminal charge. The S. 41 of the Constitution refers to harsh and oppressive treatment of a person. In the present the Complainant just stood and watched when the receptionist Peter Bayak was been assaulted within the Company’s premises by the ex-employers. Under that circumstance the actions taken by defendants would not be harsh or oppressive. The S. 59 of the Constitution provided for natural justice to act fairly. On the night of the incident the manager Mark Kleeman asked the Complainant for his explanation of the incident. The Complainant just bowed his head and said nothing. He was twice warned previously that the will be terminated if he breaches the Company rules again. He therefore could not rely on S. 59 of the Constitution.

21. The employer cannot be demanded of the reasons for terminating the employee even where the termination is without reasons or without good reasons. The law recognises that it is the employer’s unfitted discretion to hire and fire at this own will, (- Paddy Fagon –v- Negiso Distributors Pty Ltd). However in terminating the employee, the employer must observe and comply to the provisions in the Employment Act. Under this legislation the employer may do either one o the other of the followings to effect the termination. He may given Section 34 Notice of his intention to terminate the employee and at the expiry of that notice he effects the termination. On the other hand he may terminate the employee on the spot without notice by paying the employee all his entitlements there and then. Where the employer fails to do either by giving notice or payment in lieu of notice then there would be a breach of contract of service and the employees only relief is for damages.

22. It is held in the case of Robinson –v- National Airlines Commission [1983] PNGLR 476 and adopted in Apa –v- Wama & Ors [1992] PNGLR 395 that in the cases of unlawful termination the Court will not compel either a master or a servant to continue a personal relationship which has become noxious to either one of them. The only remedy is damages which includes pecuniary loss and the wages for the period of proper notice.

23. Applying the Common law principle for unlawful termination of an employee, and having considered the evidence and being satisfied on the balance of probabilities that the Complainant just stood and watched the fellow employee been assaulted by one of the two former employees of the Hotel, I find that the Complainant failed to perform his duty as expected of him by his employer. This Court finds that the Defendant is clearly covered by both the Employment Act and the Common law in that the termination of the Complainant was lawful.

24. Issue No. 2: If so then is he entitled to damages.

This issue depends on the answer to the Issue No. 1 above. That is to say that if the answer to the first issue is that the termination was unlawful, then the Court would consider damages for the Complainant. However even if the termination was lawful but where the employer either fails to give the employee the notice of intention to terminate or it fails to make payment in lieu of notice, then the Complainant would be entitled to damages. The damages generally covers his wages for the proper notice and distress caused as a result of termination.

25. The Complainant claims K10, 000.00 damages for unlawful termination and for distress and frustration. The Complainant gave no evidence of how much his fortnightly wages was at the time for his termination nor is there evidence of his other entitlements such as leave entitlements repatriation costs and so forth. And so how did he calculate and claims K10, 000.00 in damages. This claims is not supported by any evidence to satisfy the Court that he was not paid of his entitlements on his termination. He has not pleaded his entitlement. The Court could not award damages which he has not pleaded for. 

26. The defendant in his submissions said that the Complainant was paid in full his final entitlement and that after receiving his final entitlement he commenced this proceeding in Court. There is no evidence before the Court on which the Defendant based this submission. However the Complainant’s evidence failed to provide that support as well.

27. The onus is on the Complainant to precisely and specifically put his claim and plead them. It is insufficient for one to claim damages just because he believes he was unlawfully terminated of his employment without pleading them precisely. I find that the complainant has failed to plead his claims and that his termination was lawful. That being the findings of this Court, I find that the Defendant is not liable for the damages the Complainant claims. And this Court orders that the case be dismissed. Since the Complainant is unemployed I made an order that parties meet their own costs.

Lawyer for the Complainant Mr. K. Pilisa of Pilisa Lawyers 
Lawyer for the Defendant Mr. A. Poya