N4505

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CIA 195 OF 2010

BETWEEN:

BRIAN RICHES – CHIEF EXECUTIVE OFFICER, PNG PORTS CORPORATION LIMITED
First Appellant

AND:

PNG PORTS CORPORATION LIMITED
Second Appellant

AND:

ALLAN ANDITA
Respondent

Waigani: Thompson, AJ
2011: 12 August

APPEAL - District Court jurisdiction – leave to appeal – interlocutory injunctions – Employment Act – employers right to terminate – no right to reinstatement – no right to restrain eviction – set aside ex parte interim orders – exercise of discretion in District Court.

APPEAL - Appeal from District Court – no requirement for leave to appeal – District Court jurisdiction – requirements relating to interim injunctions – failure to follow National Court requirements – District Court unable to give relief which would not be given in National Court – Employment Act – employer's right to terminate – right to terminate by payment in lieu of notice – no right to reinstatement – no right to restrain eviction – damages adequate remedy – District Court improperly exercised discretion in failing to set aside ex parte interim orders.

Facts

The Respondent obtained interim orders in the District Court against the Appellants, which had terminated his services. The interim ex parte orders compelled the Appellants to restore the Respondent to the payroll and restrained the Appellants from evicting the Respondent from the appellant's accommodation. The Appellants applied for the orders to be set aside, which was refused and from which refusal this appeal comes.

Held

1. If an employee has been wrongly terminated his only remedy is to receive what he would have been entitled to receive if he had been properly terminated, (at [17]);

2. An employer has the right to terminate at any time following the procedure set out in the contract or the Employment Act, (at [19]);

3. The Respondent did not have any case for reinstatement to the payroll or accommodation, (at [20]);

4. Damages were an adequate remedy and the only remedy to which the Respondent could be entitled; 

5. A party cannot escape the established requirements of the rules of the National Court and obtain more relief than he is entitled to, by choosing to proceed in the District Court, (at [26]);

6. The interim orders of the District Court quashed, and discharged.

Cases cited

Employers Federation of PNG v. Waterside Workers Union & Seamens Union (1982) N393
Jimmy Malai v. PNG Teachers Association ([992] PNGLR 568
New Britain Oil Palm Ltd & Ors v. Vitus Sukuramu (2008) SC 946
Robinson v. National Airline Commission ([983] PNGLR 476

Counsel:
Ms. L. Nahuasi, for the Appellants 
Mr. D. Levy, for the Respondent

DECISION
12 August, 2011

1. THOMPSON AJ: On 28 September 2010, the Respondent issued proceedings in the District Court in which he claimed that the termination of his employment with the Appellants on 24 September 2010 was unlawful. On 29 September 2010, he obtained ex parte interim orders compelling the Appellants to restore him to the payroll pending the determination of the substantive proceedings, and restraining the Appellants from evicting the Respondent from the Appellant's accommodation, with no time limit. 

2. The matter was made returnable on 29 October 2010 for "mention". On that date, the Appellants applied to set aside the interim orders, but on 16 November 2010 the Court refused that application. The Appellants therefore lodged these appeal proceedings against the decision to refuse to set aside the interim orders.

3. The Respondent submits that the Appellants should have made an Application for Leave to Appeal, as required by Section 14 of the Supreme Court Act. He submits that the Appellants could not have a right of appeal without first obtaining leave. 

4. This submission is clearly wrong. There is no requirement for leave in the appeal provisions of the District Court Act. Section 219 of the Act gives any person who is aggrieved by an order, the right to appeal to the National Court. There is no requirement for leave to be first obtained – an appeal is as of right. There was therefore no requirement for the Appellants to obtain leave from the National Court, before filing their appeal. 

5. The Respondent submits that the appeal is an abuse of process, because the Appellants have more money than the Respondent, and by filing an appeal, have delayed the District Court proceedings. The financial status of the parties is not relevant to the grounds or merits of the appeal. Any delay has not been caused by the Appellants, but by the time which it has taken for the appeal to be heard in the National Court. In any event, I note that the Respondent has had the benefit of not working while still on the payroll and staying in free accommodation after his termination in September 2010. It is difficult to see how any delay could have prejudiced him. 

6. The Respondent made some objections to the Appellants' application for a stay in these proceedings, and made some complaints about the way in which his salary was being paid. It is too late to make any submissions on the application for a stay, as this has already been heard and determined six months ago. Details of how the Respondent's salary is being paid, do not form part of and are not relevant to the grounds or merits of the appeal. 

7. The real issues for determination on the appeal are:

1.	Did the District Court have jurisdiction to make the decision, and 
2.	If it did, then did the District Court err in making the decision?

8. In relation to the first ground, I incline to the view that the District Court did have jurisdiction. Under Section 21 of the District Court Act, the Court has jurisdiction where the amount of the claim does not exceed K10,000.00. The Summons & Complaint filed by the Respondent was effectively a claim for damages for wrongful termination of employment. No figures or particulars of the loss were pleaded. The Appellants produced evidence that the entitlements due to the Respondent were over K12,000.00, and that any award of damages would be in addition to that figure. If the Respondent was successful in his District Court claim, the Court would have found that he had not been given proper notice, and so on top of his entitlements, he should receive further payments in lieu of notice, and possibly also an award of damages. It is therefore almost certain that the amount of the claim exceeded K10,000.

9. However, by choosing to bring his claim in the District Court, the Respondent was voluntarily submitting to the limited jurisdiction, and was accepting that he would be unable to recover more than K10,000.00. The Court was therefore entitled to proceed on the basis that the amount of the claim would not exceed K10,000.00.

10. The second issue is whether or not the Court erred in refusing to set aside the ex parte interim orders. Both Counsel have referred to the relevant case authorities on the grant of interlocutory injunctions, as set out in the line of authorities starting from Employers Federation of PNG v. Waterside Workers Union & Seamens Union (1982) N393. The cases set out the principles for determining whether or not an applicant is entitled to an interlocutory injunction.

11. Did the Respondent show that there was a serious issue to be tried? In his Interview on 19 July 2010, the Respondent said that "My retrenchment request has already been approved by GMCS Jerome Peniasi pending to be processed by HR Department." If it was the case that the Respondent was already in the process of being retrenched prior to this incident, it is difficult to see how he could establish that he had suffered any loss as result of a wrongful termination. If he was already being retrenched in July 2010, he would then have been paid his final entitlements, been taken off the payroll, and moved out of the accommodation. It seems that this was in the process of happening in July 2010. He was not terminated until 24 September 2010, and he remained on the payroll and in the accommodation until at least 2011. It is therefore probable that he has gained further benefits, and not lost any, as a result of the termination. 

12 Leaving aside the question of any possible loss, did the Respondent first have an arguable case on wrongful termination? The basis of his claim is that he was summarily terminated without good cause and without notice, was not given an opportunity to respond to the allegations against him, that the Appellants had breached termination procedures, and that it would cause hardship to him to move out of the accommodation.

13. No particulars of any termination procedures or breaches were pleaded, and the Appellants say that there were no such procedures. The documents showed that two months before the termination, the allegations were put to him verbally in very great detail, with supporting documents. He was given the opportunity to respond over a period of four days, and he did respond to each allegation. He then had a further two months in which he could have made any further submission or provided any further evidence to the Appellants. Prima facie, it seems that he was therefore given notice of the allegations against him, was given the opportunity to respond to those allegations, and there was no procedural breach. 

14. The Respondent did not have a written contract of employment. Accordingly, his employment was governed by the Employment Act. Section 34 of the Act says that, in the absence of a contractual provision, the length of notice of intention to terminate is four weeks if the employee has been employed for over five years.

15. Section 35 says that an employer can terminate the employment at any time by giving the appropriate notice or payment of salary in lieu of that notice. 

16. Section 36 says that an employer can summarily terminate an employee without notice at any time, on certain grounds. 

17. The grounds for the Respondents' termination are set out in the Appellants' letter of 24 September 2010. It is arguable whether or not they amount to sufficient cause for summary termination under Section 36, or if notice was required under Section 35. But whichever way the termination was construed, the law in PNG is clear and well established. If an employee has been wrongfully terminated, his only remedy is to receive what he would have been entitled to receive if he had been properly terminated. Cases starting with Robinson v. National Airline Commission [1983] PNGLR 476 through to Jimmy Malai v. PNG Teachers Association ([992] PNGLR 568 have confirmed this principle. 

18. The Respondent relied solely on the case of Vitus Sukuramu v. New Britain Oil Palm Ltd & Ors where the Court took into account the fairness of the decision and the impact it would have on the employee. However, that case was set aside on appeal in New Britain Oil Palm Ltd & Ors v. Vitus Sukuramu (2008) SC 946, where the Supreme Court confirmed that the existing common law remains unchanged. An employer has the right to terminate at any time, following the procedures set out in the contract or statute. If the employer fails to follow the procedures, the employee is entitled to receive what he would have received if the employer had followed the procedures.

19. So, in this case, if the Respondent had been wrongfully terminated without notice, what was the result? It was that he would be entitled to receive what he would have received if he had been properly terminated with notice ie the appropriate amount of payment in lieu of notice. In this case, the Respondent may have been entitled to four weeks notice, or payment in lieu. In the absence of a contractual or statutory entitlement, he was not entitled to be reinstated. 

20. While the Respondent may have had an arguable case on whether or not his termination was wrongful, he did not have an arguable case for the relief which he sought. He did not have any case for reinstatement to the payroll or the accommodation.

21. When the Respondent applied to the District Court for the ex parte orders on 29 September 2010, there were a number of matters which the Court was required to take into account. 
22. First, of course, it is difficult to see why the orders should have been made ex parte at all. The Appellant was the employer, a well known company, easily located and able to be served, and was entitled to be heard. The Appellants were severely prejudiced by the Court's failure to require the Respondent to serve the application in the usual way.

23. The Appellants were further prejudiced by the Court's failure to follow the requirement to set the return date for the inter partes hearing soon after the order was made. Instead, the Court set the matter down in a month's time, and not for inter partes hearing but just for "mention". 

24. Under Section 22 of the District Court Act, the Court shall grant such relief as ought to be granted in the National Court. Under Section 47, the summons had to be served at least three clear days before hand. In this case, the summons was not served at all before the order was made, and when granting the relief, the Court did not follow the National Court procedures relating to urgent ex parte applications. 

25. The Respondent neither sought nor obtained an order dispensing with the requirement for service. The Court did not give the Appellants liberty to apply. The Court did not give a short return date for the inter partes hearing. The Court failed to follow the rule which provides that a party shall not seek and the Court shall not make any order in terms of the substantive relief. The Court made interim orders for relief which the Respondent would not have been entitled to obtain at the substantive hearing. Even if the Court had found that the Respondent had been wrongfully terminated, it could not have ordered him to be reinstated to either the payroll or the accommodation. It could only have ordered the Appellants to make the appropriate payments in lieu of notice and make a possible award of damages.

26. By making the orders which it did, the Court allowed the Respondent to avoid compliance with the procedures for interlocutory applications prescribed by the National Court, and gave the Respondent relief which he would not have been able to obtain in the National Court. A party can not escape the established requirements of the rules of the National Court and obtain more relief than he is entitled to, by choosing to proceed in the District Court. A party can not get more relief in a lower Court then he could get in the National Court.

27. The material discloses that the Respondent may have had an arguable case for alleging wrongful termination, but that he had a very weak case for showing that he had suffered any loss as a result of the alleged wrongful termination. The Court erred by failing to take these matters into account, and by failing to follow the appropriate procedures for interlocutory applications. 

28 This leads into the next issue, which is whether damages would be an adequate remedy. The Respondent did not have an entitlement to claim reinstatement. He only had an entitlement to claim notice or payment in lieu of notice, and damages. This was his substantive cause of action. It was therefore plain that damages would be an adequate remedy, and indeed could be the only remedy available to him. 
 
29. A perusal of the District Court documents shows that the Respondent did not in fact seek relief by way of restoration to the payroll either in his summons or in his notice of motion. He only sought to restrain the eviction. It is therefore difficult to see the basis on which the Court made that order against the Appellants. 

30. There is no material showing the Respondent's entitlement to be provided with the accommodation. It is not mentioned in the Appointment Offer of 8 June 2010 as being part of his terms or conditions. We do not know how long he had been in the accommodation. As a long standing employee, the Respondent had an arguable case that he should be given a reasonable time in which to move out of the accommodation. However, this would not be determined by reference to his ability to find other accommodation, or his children's schooling, but simply by reference to the time it would take him to organize the packing and removal of his personal effects. It may have been reasonable for the Court to allow the Respondent a further week or so, for this purpose. However, the Respondent had clearly been on notice since his interview in July that his employment was likely to be terminated, and he had already had five days after his termination in which to pack up, before he came to Court and was given another month by the Court before the mention date. In fact, the Court gave no time limit to the order restraining the Respondent from being evicted. 

31. The benefit of living in the Appellants' accommodation was only available to the Respondent as an employee of the Appellant. When he stopped being an employee, he stopped being able to live in the accommodation. The Appellant summarily terminated his employment, and so summarily terminated any right he may have had to live in the accommodation. Even if the summary termination was wrong, and he should have been given four weeks notice, he would have been only able to remain in the accommodation for those four weeks. The Respondent had no cause of action for any longer period. 

32. Accordingly, when the Appellants made their application on 29 October 2010 to set aside the ex parte interim orders, the position was that the Respondent had been summarily terminated on 24 September, it was arguable (though not strongly) that the termination was wrongful and he should have been given four weeks notice or pay in lieu, he had in fact remained on the pay roll and in the accommodation for over four weeks since his termination, and so the Respondent had already received the entire substantive relief to which he may have been entitled ie four weeks pay and accommodation. He had in fact received four weeks and five days.

33. There was simply no basis on which the Court should not then have discharged the ex parte injunction and orders. There are clear grounds for showing that the injunction and orders should not have been granted in the first place, either ex parte or at all. But by the time the Court heard the application to set them aside, there was no basis remaining at all, for the orders. The Court improperly exercised its discretion and erred in law by failing to set aside the injunction and orders, and this resulted in a substantial miscarriage of justice. 

34. In summary, the Court erred in refusing to set aside the interim injunction and orders because:

(a)	The injunction and orders should not have been made ex parte in the first place.
(b)	A return date should have been set for a short time, within a few days, for the inter partes hearing.
(c)	The interim orders gave the same, in fact more than, the relief sought in the substantive proceedings.
(d)	The documents disclosed a weak case for wrongful termination.
(e)	The documents disclosed no arguable case for reinstatement.
(f)	Damages were an adequate, indeed a complete, remedy for the Respondent's claim.
(g)	By reason of the passage of time since the interim ex parte orders were made, the Respondent had already received the relief which he was seeking in the substantive proceedings.

35. By reason of the interim orders, the Respondent has received all the benefits of employment without actually having to work, and has now had almost a year in which to find alternative accommodation. The Appellants have been severely prejudiced by being forced to provide free salary and accommodation to a person who no longer works for them, and has had to pay for other accommodation for its other employees who have been unable to move into the accommodation occupied by the Respondent. This is a substantial miscarriage of justice.

36. I therefore make the following orders:

1.	The appeal is upheld.
2.	The District Court's decision to refuse to set aside the ex parte interim orders of 29 September 2010, is quashed.
3.	The ex parte injunction and orders made by the District Court on 29 September 2010 are discharged forthwith.
4.	The Respondent is to pay the Appellants' costs.

_____________________________________________

Ms. L. Nahuasi: Lawyer for the Appellants 
Mr. D. Levy: Lawyer for the Respondent