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Menon v Independent State of Papua New Guinea [2008] PGNC 90; N3396 (1 July 2008)

N3396

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1742 OF 2001

BETWEEN:

KUMARAN P. M. MENON
Plaintiff

AND:

INDEPENDENT STATE OF PAPUA NEW GUINEA
Defendant

Waigani: Gavara-Nanu, J
2007: 7 September
2008: 1 July

CONTRACT – Contract of employment – Employee working away from contracted place of work – Particulars of matters claimed not pleaded – Particulars were to be advised – Particulars not provided at the trial – Insufficient and improper pleading.

CONTRACT – Contract of employment – Plaintiff claiming damages for material breach of contract – Plaintiff claiming damages for the balance of the contract – Damages claimed for redundancy period of not less than 3 months. Plaintiff in breach of contract – Plaintiff only entitled to damages equal to period of notice – Plaintiff’s position not made redundant – Plaintiff not entitled to redundancy payment.

CONTRACT – Contract of employment – Default judgment entered – Assessment of damages – No defence filed – Defendant’s liability relates only to matters properly pleaded.

Cases cited:
Brian Hodson v. PNG [1985] PNGLR 303
Harding v. Terpoi Timbers [1988-89] PNGLR 128
Jeff Tole v. PNGBC (14 March, 2007)
Joe Naguwean v. PNG [1992] PNGLR 367
Lysenko v. Airlines Commission [1988-89] PNGLR 69
Moses Luluaki v. Madang Urban Local Level Government & Steven Amenasika (8 December, 2000)
Motor Vehicle Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370
Motor Vehicle Insurance (PNG) Trust v. John Etape [1995] PNGLR 214
Nahau Ronney v. Forest Industry Council [1990] PNGLR 407
Na al v. Debege and Fly River Provincial Government N1958
National Airlines Commission v. Lysenko [1990] PNGLR 226
PNGBC v. Jeff Tole SC694

Counsel:
G. Tamade, for the plaintiff
R. Cherake, for the defendant

1 July, 2008

1. Gavara-Nanu J: The plaintiff is claiming damages against the defendant for breach of contract. The total amount claimed is K482,004.80. This amount is made up of K193, 330.65 for loss of salary; K92, 645.97 for loss of gratuity; K48, 000.00 for loss of housing allowances; K17, 694.18 for loss of leave entitlements; K48, 000.00 for loss of motor vehicle allowances; K2, 800.00 for loss of repatriation costs; K45, 534.00 for loss of airfares; K20, 000.00 for frustration and emotional distress; and K14,000.00 for cost of the proceedings and interest at 8 percent from 30 November, 2001, which is the date of the writ to the date of the judgment.

2 The claims arise out of the alleged breach of a contract of employment entered into between the plaintiff and the then Administrator of the Southern Highlands Province, Mr. Pila Niningi on 16 February, 2001.

3 The plaintiff’s claims are made pursuant to Clauses 3 and 4 of the Contract, which provide for the base salary and other entitlements.

4 Clause 6 of the Contract is the termination clause. The Clause provides:

"6. TERMINATION

The employer hereunder may terminate the employment if:

6.1 The Employee is by reason of mental or bodily infirmity or for any other natural reason whatsoever unfit to discharge or incapable of discharging his duties, except in case of injury or disability is caused during the course of discharging of his contractual duties, the Employer shall apply for clause below.

6.2 The Employee has committed a serious breach of this contract, willfully disobeys a lawful and reasonable order of the Employer.

6.3 The Employee is found guilty by a Court of Law of a fraud or dishonesty or convicted of a criminal offence whether or not relating to his employment.

6.4 Except where termination is effected by the Employer on reasons as stated above, the Employer shall either give to the Employee three (3) months notice or payment in lieu of notice and redundancy separation payment of not less than three months.

6.5 The Employee may terminate his contract shall give three (3) months notice in writing directly to the Employer, and he shall also be deemed to have resigned from the employment hereunder from the date of the expiry of the said contract.

6.6 In the event of a material breach of this agreement by the Employer or if the Employer choose to terminate this agreement for reasons other then those stated above, for the purpose of the determination of this agreement, the Employee shall be deemed to have performed his duties and obligations under this contract and all the benefits and entitlement under the contract should be paid by the Employer to the Employee.

• (a) All wages and entitlements for the balance of term not served under the contract.
• (b) Accrued Leave and Gratuity
• (c) Air Fares"
  

5 The plaintiff was employed as the Financial Controller for the Southern Highlands Provincial Administration, when the Southern Highlands Provincial Government was suspended. The plaintiff was contracted to sort out and improve the management of the finances of the Province. The Contract was for 36 months from 16 February, 2001. Thus the Contract would have terminated on 16 February, 2004.

6 The plaintiff says he performed his obligations under the contract from the date of the Agreement up to 10 August, 2001, when the defendant began to breach the Contract by failing to pay his salaries and entitlements.

7 The trial was only for assessment of damages for the plaintiff, the default judgment having been entered against the defendant on 20 March, 2002. The plaintiff relies on his own affidavit which was sworn on 12 April, 2003. The defendant in its defence used the plaintiff’s affidavit to respond and to argue its case. It did not call any witnesses.

8 In paragraph 10 (C) of the Statement of Claim, the plaintiff claimed loss of housing allowances with particulars to be advised, in paragraph 10 (D), plaintiff claimed loss of motor vehicle allowances with particulars to be advised, in paragraph 10 (E) the plaintiff claimed loss of leave allowances with particulars to be advised and in paragraph 10 (F), the plaintiff claimed loss of airfares on leave (14 days per 6 months) from Mount Hagen to Kuala Lumpur, Malaysia, again with particulars to be advised. In paragraph 11, the plaintiff claimed airfares and repatriation costs, again with the particulars claims to be advised. This claim included freight and handling charges. Thus, the particulars of claims made under paragraphs 10 (C)(D)(E) and (F) and 11 of the Statement of Claim should have been provided at least at the trial, but were not provided.

9 In support of his claims, the plaintiff also relies on three letters he wrote, one to the Secretary, Ministry of the Local Level Government Affairs, dated 10 September, 2001, the other to Honourable Mathias Karani, Minister for Provincial and Local Level Government Affairs dated 30 October, 2001 and the last one to Mr Uhae Iabo, then Provincial Administrator of Southern Highlands Province, dated 13 November, 2001.

10 In his letter of 10 September, 2001, to the Secretary for Department of Provincial and Local Level Government Affairs, the plaintiff told the Secretary that he was assaulted by one of the staff members of the Southern Highlands Provincial Administration on 6 July, 2001 as a result, he was working from Port Moresby. He said, he could not work in Mendi because of fear that he might be assaulted again by other staff of the Provincial Administration. He said, since moving to Port Moresby, he had experienced difficulties in being paid. He also told the Secretary that he had outstanding salaries which were yet to be paid to him and said that lack of transport was causing great difficulty and inconvenience to him in performing his work. In the third paragraph of the letter, he advised the Secretary of certain jobs he had completed as directed by the NEC.

11 In his letter of 13 November, 2001 to the Provincial Administrator, the plaintiff told the Administrator that he had not been paid for about seven fortnights. In that letter the plaintiff noted that a new appointment was made to the position of Financial Controller without his contract being terminated. In acknowledging the appointment of the new Financial Controller for Southern Highlands Provincial Administration, the plaintiff said he had no problems with the new appointee but said that it would have been honourable had his contract been terminated first before appointing the new Financial Controller. He raised concern that there were two officers performing same duties and holding the same position. He then went on to advise the Administrator that he had decided to take proceedings against the Administration of the Southern Highlands Provincial Government to recover his outstanding salaries and entitlements.

12 In his earlier letter of 30 October, 2001 to the Minister for Provincial and Local Level Government Affairs, the plaintiff told the Minister that he was not paid for about six fortnights which he said was in direct breach of his contract of employment. He also told the Minister that he was assaulted by a staff of the Provincial Administration on 6 July, 2001 while doing his work in front of other staff in Mendi, as a result he had to move to Port Moresby for safety reasons, which he said was causing him difficulties in securing accommodation and transport.

13 The plaintiff’s appointment as the Financial Controller for the Southern Highlands Provincial Administration followed an NEC decision made on 13 October, 2000, in which the NEC decided to withdraw the powers and functions of the Southern Highland Provincial Government. Those powers and functions were transferred to the Minister for Provincial and Local Level Government Affairs. The position of the Financial Controller was created in consultation with the Department of Personnel Management. The duties of the Financial Controller were to assist the Southern Highlands Provincial Administration in improving and restoring control and management of the finances of the Southern Highlands Provincial Government. The letter of appointment for the plaintiff as the Financial Controller for Southern Highlands Provincial Administration was signed by the then Minister for Provincial and Local Level Government Affairs, Iairo Lasaro.

14 It was submitted by Ms Tamade that the plaintiff’s termination was unlawful because he was not given a notice of intention to terminate by the defendant nor was he served with a termination letter setting out grounds for his termination.

15 The plaintiff has placed reliance on Nahau Rooney vs. Forest Industry Council [1990] PNGRL 407; Moses Luluaki v. Madang Urban Local Level Government and Steven Amenasika (8 December, 2000) and Jeff Tole v. PNGBC (14 March, 2007) in his claim for unpaid salaries and entitlements for the balance of his contract. For his claim for housing, vehicle and other allowances including airfares and repatriation costs, the plaintiff relies on Lysenko vs. Airlines Commission [1988-1989] PNGLR 69; National Airlines Commission vs. Lysenko [1990] PNGLR 226; Na Al vs. Debege and Fly River Provincial Government N1958 and for distress, frustration and general disappointment; the plaintiff relies on Brian Hodson vs. PNG [1985] PNGLR 303; Harding vs. Teperoi Timbers [1988] PNGLR 128, Joe Naguwean vs. PNG [1992] PNGLR 367.

16 Mr. Cherake argued that paragraphs 10 C, D, E and F and 11 of the Statement of Claim have not been properly pleaded in that, no particulars have been pleaded. These are the paragraphs in which the plaintiff pleaded that particulars were to be advised. It was therefore submitted that claims in respect of these paragraphs should be dismissed. As to the claim for distress and frustrations, Mr. Cherake also submitted that this has not been properly pleaded because particulars of distress and frustrations have not been pleaded. Mr. Cherake further submitted that the claim for airfares have not been proven because the plaintiff has not provided any evidence in support of the claim. He advanced similar arguments for claims for repatriation costs. It was submitted that no supporting evidence has been adduced, the only evidence the plaintiff relies on is a statement of estimates which he argued is insufficient.

17 Ms Tamade in reply submitted that evidence provided by the plaintiff’s supporting affidavit provides sufficient particulars for matters pleaded in paragraphs 10 C, D, E and F and paragraph 11 of the Statement of Claim. Thus the relief sought in respect of those matters should be granted.

18 As this is an assessment of damages following on from the default judgment being entered against the defendant, liability is not an issue. However, plaintiff still has to prove his claims with credible evidence. He carries the ultimate onus to prove his claims.

19 Defendant’s liability will relate only to claims properly pleaded in the Statement of Claim and which have been substantiated by the plaintiff with supporting credible evidence. This point was emphasized by Supreme Court in PNGBC v. Jeff Tole SC694 in which the Court said:

"But with the exceptions of fresh matters being introduced without objections at trial, parties are restricted to the case and relief detailed in their pleadings. In any other case, to alter pleadings, a party must seek amendment and only if such amendment is granted can there be relief outside that which has been pleaded.

...The default judgment only resolved the liability against PNGBC for the matters pleaded and for the relief prayed for in the Statement of Claim. It follows therefore that the assessment of damages could only be made for the relief actually pleaded..."

20 The plaintiff had the obligation to properly plead his claims, including providing particulars of those claims. The failure to do so left the claims uncertain and undefined thus leaving the defence not knowing what to defend. That was bad pleading thus providing the basis for the plaintiff’s claims to be dismissed. See Motor Vehicle Insurance (PNG) Trust v. John Etape [1995] PNGLR 214 and Motor Vehicle Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370.

21 Thus, having regard to these principles of pleading, I find that claims for allowances for housing, motor vehicle in paragraphs 10 C, D and E and leave and cost of airfares in paragraph 10 F and 11 A and freight and handling charges in paragraph 11B of the Statement of Claim have not been properly pleaded in that, particulars of matters pleaded under these paragraphs have not been provided. Furthermore, no evidence was adduced in support of those claims at the trial. For airfares, the plaintiff has provided a statement of estimated costs from Port Moresby to Kuala Lumpur but that is insufficient. A mere statement of estimated cost of airfares prepared by the plaintiff for flights from Port Moresby to Malaysia is not a credible evidence. For these reasons, claims made under paragraphs 10 C, D, E, F and 11 of the Statement of Claim are dismissed.

22 As to the claim for loss of salaries, the plaintiff has relied on Nahau Rooney vs. Forest Industry Council [1990] PNGLR 407 and PNGBC v. Jeff Tole (supra). I find these two cases to be distinguishable from the case before me. In Rooney’s case, it was found that the contract was unlike most government contracts of employment which give the right to termination on some months notice being given, there was no clause providing for termination upon condition. Thus, Woods, J, said:

"..There is no such right here which means that the defendant is liable for the full term."

23 It was also found by the Court that the position the plaintiff held was scares and it was difficult for her to get another job at that level. For that reason, the Court also found that the plaintiff could not mitigate her damages. In Jeff Tole v. PNGBC (supra), the termination was found to be unlawful by the National Court, which was not challenged on appeal, what was challenged on appeal was the order by the National Court for the plaintiff to be paid the full balance of his contract, which was about one year nine months and in the contract there was a clause which provided that if termination was unlawful, the plaintiff was to be paid either the balance of his contract or salary equal to one year’s salary, whichever was lesser. The trial judge ordered that the plaintiff be paid salaries and entitlements for the full balance of the contract which was one year nine months. The Supreme Court said the trial judge erred because the plaintiff should have been paid salaries equal to only one year which as provided under the contract was lesser than salaries for one year nine months.

24 In this case, provisions of termination clause are quite different. Under sub-clauses 6.1, 6.2 and 6.3, the employer could terminate the employee summarily either on medical grounds or for disciplinary reasons for wilfully disobeying a lawful and reasonable order of the employer or for being convicted of an offence relating to fraud or dishonesty. Under sub-clause 6.4, the employer could terminate the employee with three months notice or payment in lieu of notice as well as redundancy separation payment for not less than three months. Under sub-clause 6.5, the employee could terminate the contract by giving three months notice to the employer.

25 The facts of this case show that the termination was not for any of these grounds i.e; grounds under sub-clauses 6.1, 6.2 and 6.3. The plaintiff is claiming breach of clause 3, which is the remuneration, allowances and benefits clause which the plaintiff claims the defendant has breached by refusing to pay his benefits. Because the plaintiff claiming that he be paid his salaries and other entitlements for the full balance of his contract, the claim appears to be based on sub-clause 6.6. This sub-clause provides that if there is a material breach by the employer or if the employer chooses to terminate for reasons other than those stated under sub-clauses 6.1, 6.2 and 6.3:-

"...The employee shall be deemed to have performed his duties and obligations under this contract and all the benefits and the entitlements under the contract should be paid by the employer to the employee..

(a) All wages and entitlements for the balance of term not served under the contract.
(b) Accrued Leave and Gratuity
(c) Air Fares"

26 The plaintiff says the employer has repudiated the contract by refusing to pay his salaries from 30 August, 2001. Thus the claim for unpaid salaries and entitlements up to 16 February, 2004. The plaintiff claims K482, 004.80 for unpaid salaries and entitlements. However, this amount is now reduced because claims for allowances for housing, airfares, motor vehicle, repatriation costs including airfares and freight charges have been dismissed for not being properly pleaded let alone proven. This leaves me to consider whether the plaintiff is entitled to claim other damages for the balance of the contract. Here, I think Clause 2 is critical. It provides:

2. CONTRACT OF EMPLOYMENT

2.1 The Employee agrees to serve the Employer in the office described as Financial Controller. The Employee agrees to serve in such other capacity or in such locality as the Employer may determine.

2.2 The contract duration shall be for a period up to 36 months commencing from the effective date of this agreement.

2.3 The Employee shall observe:

(a) At all times behave in a manner appropriate befitting the office.

(b) Carry out work in a conscientious and timely manner at the standard of quality required by the Employer and in accordance with current financial and administration procedures.

(c) At all times be polite co-operate and helpful to other persons, and to all people having business with Provincial Authority in a manner that will reflect well on the Province.

(d) At all time, be honest in dealings with staff and persons having business with it.

(e) Never be a party to any theft, fraud, dishonesty or falsification relating to any of the Provincial’s property or affairs.

(f) Shall not be under the influence of alcohol or drugs during working hours.

(g) Not, while employed under this contract, engage in any other paid employment unless approved by the Provincial Authority.

If the Employee acts in breach of any of the above, the Employee will face disciplinary action including possible termination.

27 Sub-clause 2.3 is in mandatory terms and provides that employee was to relate well with his fellow staff of the Southern Highlands Provincial Administration during the currency of his employment and was to co-operate with all people having business with the Provincial Authority in a manner that would reflect well on the Province. He was also required to behave appropriately and in a manner that was fitting to the office he was holding as the Financial Controller for the Southern Highlands Provincial Administration and was required to work in a conscious and timely manner and at the standard and quality required by the employer and was to, pursuant to sub-clause 2.1, perform his duties in such locality as the employer may determine.

28 In the second paragraph of his letter to the Secretary for Provincial and Local Level Government Affairs dated 10 September, 2001, the plaintiff said:

"As you are aware, one of the staff of the Administration on 6 July, 2001 assaulted me and this made me to be based in Port Moresby to carry out my work. I would no longer be able to carry out my work effectively in Mendi, as I have to work in fear of further assault by another staff. Since then, I have experienced great difficulty in getting paid as normal as others to support myself in Port Moresby".

29 In the third paragraph of the letter, he mentioned the few outstanding jobs he had completed since his appointment.

30 In his letter to the Minister for Provincial and Local Level Government Affairs dated 30 October, 2001, the plaintiff said he was moved to Port Moresby by the Administrator for safety reasons after he was assaulted on 6 July, 2001 by one of the staff members presumably of the Southern Highlands Provincial Administration. But in his letter to the Provincial Administrator dated 13 November, 2001, the plaintiff made no mention of him being assaulted by a staff of the Southern Highlands Provincial Administration while he was working in Mendi, thus resulting in him moving to Port Moresby to carry out his contractual obligations in Port Moresby. The letter is silent on these matters.

31 From these letters, it is clear that the plaintiff was purportedly performing his obligations as the Financial Controller for Southern Highlands Provincial Administration in Port Moresby at relevant times. But it is not clear where exactly in Port Moresby he was carrying out those obligations and how he was carrying them out. More importantly, whether he was allowed by the employer to come and work in Port Moresby. Whilst, I note that he told the Minister that he was told by the Administrator to work in Port Moresby, I am not convinced that, that was the case because that was not mentioned to the Secretary for Department of Provincial Affairs and the Administrator for Southern Highlands Province in the two letters he sent to them. Pursuant to clauses 2 and 3, the plaintiff was expected to work in Southern Highlands and carry out his contractual obligations as the Financial Controller for the Southern Highlands Province there. Moving to Port Moresby was not what was provided for in the contract. To me, moving to Port Moresby was clearly the reason why the defendant was not paying him his salaries. This is confirmed by the fact that the defendant had appointed a new Financial Controller to replace the plaintiff. The plaintiff’s action in moving to Port Moresby essentially breached clauses 2 and 3 of his contract of employment.

32 In those circumstances, I am of the opinion that the plaintiff should not be paid the balance of the contract, he should rather be paid the period of notice which the defendant ought to have given under sub-clause 6.4 which is three months. Because no defence was filed by the defendant, the defendants reasons for not paying the plaintiff are not known but it can in my view be reasonably inferred from the evidence, including the above three letters that plaintiff’s salaries and entitlements were withheld because he was not working in Southern Highlands Province as provided under the contract. In other words, he had breached his contract of employment. He therefore does not come to this Court with ‘clean hands’. The Southern Highlands Provincial Administration did not know what he was doing because he was not working at the Southern Highlands Provincial Administration headquarters in Mendi. He is therefore entitled to payments of salaries which are equal to the period of notice which is three months. Such payment would be made under clause 6.4 of the contract. Under this clause, there is a further requirement that the plaintiff be paid redundancy separation of not less than three months. I am of the opinion that, no redundancy separation payment should be paid to the plaintiff because the position of Financial Controller was not made redundant. Here, the plaintiff was simply replaced by another person to carry out the duties and responsibilities of the Financial Controller for the Southern Highlands Province. This is confirmed by the plaintiff’s letter to the Provincial Administrator.

33 According to the plaintiff’s affidavit, he was last paid his fortnightly pay on 10 August 2001, and was on gross fortnightly pay of K4, 528.65. I will use this to calculate his lost salary for 3 months. This works out at K27, 171.90t.

34 I will allow interest at 4 percent from the date of the writ which is 30 November 2001 to 1 July, 2008. This is a period of 6 years 6 months 3 days. For this period, I calculate the amount at K7, 155.27

35 Thus total amount awarded to the plaintiff in damages and interest is K34,327.17.
36 The defendant will pay the plaintiff’s costs and incidentals to these proceedings.

Pacific Legal Group: Lawyers for the Plaintiff
Solicitor General: Lawyers for the Defendant