N5861
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 195 OF 2014

ROSLYN YANODA, JOHN LABABANA, BEN MAMBI, MEN YEGIGORI, BENO WALIKEN, BENSON ELIAS, DUBE BAL, EDWIN PULUNG, LAWRENCE WORIO, PAUL WULBOU, PETER KERRY,
RUSSEL BALIFUN & TASAN MEBAGER
Plaintiffs

V

TELIKOM PNG LIMITED
First Defendant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Madang: Cannings J
2014: 3 December,
2015: 13 February

LAW OF EMPLOYMENT – redundancy agreements – whether decision of National Executive Council regarding tax exempt payments was enforceable – whether a memorandum of agreement between an industrial union and an employer must be registered under Industrial Organisations Act – whether employer could be ordered to pay amounts deducted in tax to retrenched employees.

REMEDIES – declarations – whether the relief sought by plaintiffs involved real controversy with the defendants – whether relief sought should be refused due to failure to seek consequential orders.

The National Executive Council decided to implement a "National Broadband Project Implementation Study", which would involve restructuring the State-owned telecommunications network and the State-owned company, Telikom PNG Ltd, and lead to a number of Telikom employees being made redundant. As part of Decision No 107/2011, the NEC "approved the exempt tax obligations on redundancy entitlements of Telikom and/or its subsidiaries staff affected by the implementation of the Implementation Study recommendations". Telikom subsequently entered into a memorandum of agreement with a union representing its employees regarding the redundancy exercise necessitated by the company's restructure. The agreement set out which employees were eligible for redundancy and how their redundancy payments would be calculated. The 13 plaintiffs are former Telikom employees who were eligible for redundancy and elected to take part in the redundancy exercise. They were each paid redundancy payments calculated in accordance with their length of service and other criteria prescribed in the MOA. They accepted the payments in February 2013, but were aggrieved by the amounts of the payments. They commenced proceedings in the National Court by originating summons in February 2014 seeking various declarations, including that Telikom had failed to comply with the NEC Decision and that the 2011 MOA is null and void. Their essential grievance is that they were under-paid their redundancy payments in two respects: (a) the payments were not exempt from tax, as required by the NEC Decision and (b) the payments were calculated according to the formula in the 2011 MOA, which is a less generous formula than that in the 2010 enterprise agreement, which is a registered industrial award, which is the formula that they claim should have been applied. Telikom argued in response, as a preliminary issue, that all relief sought should be refused as the plaintiffs had sought only declarations and no actual orders for consequential relief. As to the merits of the proceedings, Telikom argued that the payments made to the plaintiffs were correct and in accordance with law as it was not lawful or practicable to make the payments exempt from tax (and to the extent that there was an obligation to make the payments exempt from tax, this was the responsibility of other governmental bodies, not Telikom's) and the formula in the 2011 MOA was the correct one as the MOA had been entered into in good faith with the union representing Telikom employees.

Held:

(1)	Though the principal relief was in the form of declarations and no orders for consequential relief were expressly sought, there was a real controversy at the centre of the case: a grievance about underpayment of redundancy payments. The question of whether the declarations should be granted was not merely of academic interest or hypothetical in nature. There was no abuse of process. It was open to the Court to make orders to do justice in the circumstances of the case under Section 155(4) of the Constitution. The originating summons, though drafted in a novel manner, was not so inappropriately drawn as to prevent the Court making efficacious and meaningful orders that would determine the real issues in dispute.

(2)	Telikom was obliged to ensure that the redundancy payments were tax exempt. It failed to discharge that obligation.

(3)	As to the formula for calculation, the formula in the 2011 was the correct one as the MOA had been entered into in good faith with the union representing Telikom employees and it was neither unlawful nor unenforceable.

(4)	Declarations to the above effect were made, and the Court made consequential orders under Section 155(4) of the Constitution to give effect to the primary rights and obligations so declared, in that it was ordered that: the redundancy payments of each plaintiff are to be recalculated in accordance with the declarations so as to identify the correct amount of tax to be remitted to the Internal Revenue Commission, and the correct amount having been identified, Telikom is liable to pay that amount to the plaintiff concerned.

(5)	The parties were given three weeks within which to reach agreement on the amounts due and payable to the plaintiffs, failing which directions will be given for a trial on assessment of those amounts.

Cases cited

The following cases are cited in the judgment:

Application Pursuant to s 155(4) by John Mua Nilkare (1997) SC536
Avia Aihi v The State (No 1) [1981] PNGLR 81
Bill Skate and Peter O'Neil v Jeffrey Nape, Speaker of Parliament (2004) SC754
Donigi v The State [1991] PNGLR 376
Gabriel Yer v Peter Yama (2009) SC996
John Manau v Telikom (PNG) Ltd (2011) SC1146
Louis Medaing v Ramu Nico Management (MCC) Ltd (2011) SC1156
Ok Tedi Mining Ltd v Niugini Insurance Corporation (No 2) [1988-89] PNGLR 425
Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438
SCR No 2 of 1981 [1981] PNGLR 150
The State v Central Provincial Government (2009) SC977
Ume More v UPNG [1985] 401 at 402

Abbreviations

The following abbreviations appear in the judgment:

AC – Appeals Cases
ADR – Alternative Dispute Resolution
CEO – Chief Executive Officer
IPBC – Independent Public Business Corporation
IRC – Internal Revenue Commission
J – Justice
MOA – Memorandum of Agreement
N – National Court judgment
NEC – National Executive Council
PNGLR – Papua New Guinea Law Reports
SC – Supreme Court judgment
SC Ref – Supreme Court Reference

ORIGINATING SUMMONS

This was a trial in which the plaintiffs sought declarations as to the rights and obligations of the parties in regard to a redundancy exercise.

Counsel

T Kamuta, for the plaintiffs
C K Kuira, for the first defendant
S Phannaphen, for the second defendant

13th February 2015 

1. CANNINGS J: The plaintiffs are former employees of Telikom PNG Ltd. They participated in a redundancy program in the period from 2011 to 2013. They received their payouts in early 2013. They say that they were under-paid. They have applied to the court by originating summons seeking declarations as to their rights and the obligations of Telikom.

BACKGROUND

2. In 2011 the National Executive Council decided to implement a "National Broadband Project Implementation Study", which would involve restructuring the State-owned telecommunications network and the State-owned company, Telikom PNG Ltd, and lead to a number of Telikom employees being made redundant. As part of a formally recorded and numbered decision, No 107/2011, the NEC:

approved the exempt tax obligations on redundancy entitlements of Telikom and/or its subsidiaries staff affected by the implementation of the Implementation Study recommendations.

3. Telikom subsequently entered into a memorandum of agreement with a union representing its employees, the PNG Communication Workers Union, regarding the redundancy exercise necessitated by the restructuring of Telikom. This agreement was entitled "Memorandum of Agreement on 2011 Voluntary Redundancy Exit Plan (VES)". The agreement set out, amongst other things, which employees were eligible for redundancy and how their redundancy payments would be calculated.

4. The 13 plaintiffs, who are former Telikom employees based in Madang, were eligible for redundancy and elected to take part in the redundancy exercise. They were each paid redundancy payments calculated in accordance with their length of service and other criteria prescribed in the MOA. They accepted the payments in February 2013. Approximately 500 Telikom employees participated in the redundancy exercise.

5. They appear to have signed deeds of release, acknowledging that they accepted the payments as full and final payments. However, they claim to have been misled by Telikom into thinking that they would later be paid the amounts of tax that was deducted from their payouts. At the trial, Telikom did not rely on the existence of the deeds of release as a defence to the proceedings. It is therefore not necessary to find as a fact which of the plaintiffs signed a deed of release. Nor is it necessary to decide what the effect in law is, if any of the plaintiffs did sign such a deed.

ORIGINATING SUMMONS

6. The plaintiffs are aggrieved by the amounts they received, which were not exempt from tax. They commenced proceedings in the National Court by originating summons in February 2014, naming Telikom as first defendant and the State as second defendant. The plaintiffs seek the following relief:

1	A declaration that the first defendant unreasonably failed to comply with the National Executive Council (NEC) Decision No 107/2011 to 'exempt tax obligations on redundancy entitlements for the plaintiffs identified for the Voluntary Exit Scheme exercise.

2	A declaration that the NEC Decision is a valid and effective executive decision made by the National Government.

3	A declaration that the first defendant's failure to comply with the NEC Decision No 107/2011 is contrary to Sections 8(1) and (2) of the Telikom PNG Limited Act 1996, and hence, is unlawful.

4	A declaration that the Memorandum of Agreement 2011 signed between Telikom PNG Ltd and PNG Communication Workers Union is null and void and is not enforceable as it is not registered with the Office of the Industrial Registrar and hence it is contrary to Section 44 of the Industrial Relations Act Chapter 174.

5	A declaration that the Enterprise Agreement 2010 signed between Telikom (PNG) Ltd and PNG Communication Workers Union is valid and has effect.

6	A declaration that the first defendant must comply with the requirements of the Enterprise Agreement, which requires that final entitlements for the plaintiffs in the redundancy exercise be computed and/or based on total salary package.

7	A declaration that there was misrepresentation by the first defendant in computing and making final retrenchment payouts to the plaintiffs without the tax exemptions, as so directed in the National Executive Council Decision No 107/2011.

8	A declaration that there was misrepresentation by the first defendant in computing and making final retrenchment payouts to the plaintiffs on base salary instead of total salary package as per the Enterprise Agreement 2010.

9	Costs incidental to and for this application in favour of the plaintiffs.

10	An order that the Registrar, which shall take place forthwith, abridge the time for entry of the order to the time of settlement.

11	Any such other or further orders the Court deems just under the circumstances.

7. The plaintiffs' essential grievance is that they were under-paid their redundancy payments in two respects:

(a)	the payments were not exempt from tax, as required by the NEC Decision; and

(b)	the payments were calculated according to the formula in the 2011 MOA, which is a less generous formula than that in the 2010 Enterprise Agreement between Telikom and the PNG Communication Workers Union, which is a registered industrial award.

TELIKOM'S POSITION

8. Other ex-Telikom employees commenced similar proceedings, some in Waigani and some in Lae. Mr Kuira, for Telikom, suggested that the existence of those other proceedings, which were at various stages, meant that the Madang proceedings should be put on hold and consideration given to consolidating them with the other proceedings. Mr Kamuta, for the plaintiffs, disagreed. I was persuaded by Mr Kamuta that the plaintiffs should have their day in Court as they wanted to have their grievance heard and resolved as soon as possible.

9. Telikom argues, as a preliminary issue, that all relief sought should be refused as the plaintiffs are only seeking declarations and not actual orders for consequential relief. As to the merits of the proceedings, Telikom argues that the payments made to the plaintiffs were correct and in accordance with law. As to the failure to make the payments exempt from tax, it is argued that it was not practicable or lawful to do so; and to the extent that there is an obligation to make good the amounts deducted in tax, this may be the responsibility of other governmental bodies, but it was not Telikom's responsibility. As to the formula for calculation, the formula in 2011 was the correct one as the MOA had been entered into in good faith with the union representing Telikom employees. The State, represented by Mr Phannaphen, supported Telikom's position.

ISSUES

10. Four main issues arise:

1	Should all relief be refused because of the failure to seek consequential relief?

2	Was Telikom obliged to make the redundancy payments tax exempt? If yes, did it discharge the obligation?

3	Was the 2011 MOA formula the correct one to apply?

4	What declarations or orders should the Court make?

1	SHOULD ALL RELIEF BE REFUSED BECAUSE OF THE FAILURE TO SEEK CONSEQUENTIAL RELIEF?

11. Mr Kuira submits that the striking feature of the originating summons is that the plaintiffs are not seeking any orders for payment. They are only seeking declarations, which are in vague and general terms. They are raising academic and hypothetical questions. There is no real dispute between the parties. The proceedings are an abuse of process.

12. He relies on the decision of the Supreme Court in The State v Central Provincial Government (2009) SC977 in support of these arguments. In that case the Central Provincial Government sought declarations in the National Court that an extension of the mining lease of Tolukuma Gold Mines was unconstitutional and null and void. The Supreme Court ruled that the National Court proceedings were an abuse of process. The plaintiff had only sought declarations, without consequential relief, and failed to satisfy the criteria for granting of declaratory relief. The Court endorsed principles applied by Kapi DCJ in Ok Tedi Mining Ltd v Niugini Insurance Corporation (No 2) [1988-89] PNGLR 425 and by Brown J in Donigi v The State [1991] PNGLR 376: if a plaintiff seeks a "mere declaratory order" without seeking consequential relief it will usually be the case that the Court should refuse to make the declaration. The Court relied on the decision of the House of Lords in Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438. The inherent jurisdiction of the National Court to grant a declaration of the rights and obligations of parties or the legal effect of their actions should only be exercised if the following criteria are satisfied:

1	There must exist a controversy between the parties.
2	The proceedings must involve a right.
3	The proceedings must be brought by a person who has a proper or tangible interest in obtaining the order.
4	The controversy must be subject to the court's jurisdiction.
5	The defendant must be a person having a proper or tangible interest in opposing the plaintiff's claim.
6	The issue must be a real one. It must not be merely of academic interest, hypothetical or one whose resolution would be of no practical utility.

13. I agree that it seems unusual that the originating summons focuses so much on asking for declarations without seeking actual orders against Telikom. I don't understand why such an indirect approach has been taken. I also think these proceedings would have more appropriately been commenced by writ of summons. The elements of the plaintiff's claim would have clearly been spelt out. The defendants would have filed defences. Then the issues would have been clearly defined. 

14. In any event, should these proceedings be in effect summarily dismissed because of the plaintiffs' preoccupation with declarations? No. I am satisfied that the criteria identified by the Supreme Court in the Central Provincial Government case have been satisfied, in that:

1	A real controversy exists between the parties: the plaintiffs are saying that they were underpaid and that it is Telikom's responsibility to pay them more. Telikom denies that.

2	The proceedings involve legal rights: the plaintiffs are asserting that they had a legal right to have their redundancy payments made tax-free, and calculated in accordance with the 2010 formula.

3	The proceedings have been brought by persons who have a proper and tangible interest in obtaining orders against Telikom.

4	The controversy is within the jurisdiction of the National Court.

5	The defendants, in particular Telikom, have a proper and tangible interest in opposing the plaintiffs' claims.

6	The issues are real. They are not merely of academic interest or hypothetical. Their resolution will have practical utility. Though the first eight remedies sought in the originating summons are entirely declaratory in nature and the next two are inconsequential, the last one, No 11 – "any such other or further orders the Court deems just under the circumstances" – provides scope for the Court to make consequential orders, having real practical utility.

15. I consider that the originating summons, though drafted in a novel manner, is not so inappropriately drawn as to prevent the Court making efficacious and meaningful declarations and orders that will determine the real issues in dispute. It is not appropriate to summarily refuse all the relief sought by the plaintiffs or to dismiss the proceedings on the ground of their failure to directly seek consequential relief.

16. I will now address what I regard as the two critical questions of law that need to be determined (issues 2 and 3); and then address what declarations and orders should be made (issue 4).

2 	WAS TELIKOM OBLIGED TO MAKE THE REDUNDANCY PAYMENTS TAX EXEMPT? DID IT DISCHARGE THE OBLIGATION?

Did Telikom have a legal obligation to make the payments tax exempt?

17. The plaintiffs say yes. Telikom says no. The plaintiffs' case is based on the terms of Decision No 107/2011, paragraph 5, by which the NEC:

approved the exempt tax obligations on redundancy entitlements of Telikom and/or its subsidiaries staff affected by the implementation of the Implementation Study recommendations.

18. The plaintiffs argue that that was a valid and effective executive decision of the National Government that Telikom was obliged to implement by virtue of Section 8 (general policies of the government) of the Telikom PNG Limited Act 1996, which states:

(1)	The Minister may notify the Board of general policies of the Government approved by the National Executive Council that are to apply in relation to Telikom.

(2)	The Board shall, as far as practicable, ensure that policies notified under Subsection (1) are carried out in relation to Telikom and its subsidiaries.

19. Telikom does not dispute that:

•	Decision No 107/2011, paragraph 5 is a valid and effective executive decision;

•	the Board of Telikom was at the material time subject to a statutory obligation to carry out Government polices by virtue of the Telikom PNG Limited Act;

•	Decision No 107/2011, paragraph 5 is a Government policy.

20. Its argument is that:

•	the Decision is not directed at Telikom, it is directed at the Independent Public Business Corporation and the Minister for Public Enterprises and State Investments, who were tasked by the NEC with responsibility for implementing all aspects of Decision No 107/2011, involving restructuring of the National Transmission Network, restructuring of Telikom, including the entitlements of Telikom employees;

•	the Independent Public Business Corporation failed to provide funding to Telikom that would have allowed it to make the redundancy payments tax exempt;

•	the Minister, Hon Ben Micah MP, made a conscious decision not to implement Decision No 107/2011, paragraph 5, which he conveyed in a letter to Telikom's, Charles Litau, dated 31 October 2012 (which was in evidence), which Telikom was bound by;

•	despite it not being its responsibility to ensure that the redundancy payments were tax exempt, Telikom sought assistance from the Internal Revenue Commission to find a way of how that could be done, but were advised in writing by the Commissioner General of Internal Revenue that it was not possible, and that the only way it could be done lawfully was by amendment to the Income Tax Act 1959;

•	even if it were Telikom's responsibility to implement Decision No 107/2011, paragraph 5, it could not be done, it was impractical to do so, so there was no breach of the obligation in Section 8, which is to ensure that government policies are implemented "as far as practicable".

21. At this juncture I point out that subsequent to the hearing of this matter, at which all parties agreed that the relevant law was the Telikom PNG Limited Act 1996, my own research has revealed that that Act may have been repealed by the Telecommunications Industry Act 2002, Sections 79 and 80, which commenced operation on 1 June 2002. I have considered recalling counsel to address the Court on this issue but decided that that was not necessary as my determination of the question whether Telikom was obliged to make the redundancy payments tax exempt is the same irrespective of whether the 1996 Act was the relevant law. I have concluded that Telikom was obliged to make the payments tax exempt, for the following reasons.

On the presumption that the Telikom PNG Limited Act 1996 applied

22. I find that:

•	Decision No 107/2011, paragraph 5, was a 'general policy of the Government approved by the National Executive Council';

•	it applied 'in relation to Telikom';

•	it was 'notified' by the Minister to the Board of Directors of Telikom;

•	it satisfied all the requirements of a Government policy for the purposes of Section 8(1) of the Telikom PNG Limited Act (a proposition not disputed by Telikom).

23. I reject the argument that it was not the responsibility of Telikom to carry out or implement the policy. I acknowledge that it was also the responsibility of the IPBC and the Minister to carry out the policy. The obligation of Telikom, the Minister and the IPBC was joint and several in nature. If the IPBC or the Minister took it upon themselves to carry out the policy by ensuring that ex-Telikom employees received their redundancy payouts on a tax exempt basis, Telikom would be relieved of its obligation. But that did not happen. The IPBC did not provide funding, and the Minister decided that the policy should not be implemented. Telikom's obligation therefore remained in force.

On the presumption that the Telikom PNG Limited Act 1996 did not apply

24. The evidence has shown that Telikom is a wholly State-owned company. It falls within the definition of "Majority State Owned Enterprise" in Section 2(1) of the Independent Public Business Corporation of Papua New Guinea Act 2002. It therefore in my view has an underlying and implied statutory obligation, of the same nature and extent as that expressly imposed by Section 8 of the Telikom PNG Limited Act 1996, to ensure as far as practicable that general policies of the National Government approved by the National Executive Council are carried out.

Conclusion re existence of obligation

25. Yes, Telikom had a legal and enforceable obligation to make the payments tax exempt, and this was the case irrespective of whether or not the Telikom PNG Limited Act 1996 applied during the relevant period, since 2011.

Did Telikom discharge its obligation to make the payments tax exempt?

26. It is clear from the evidence of correspondence between Telikom and the Commissioner General of Internal Revenue that Telikom made a genuine attempt to find a way to make the redundancy payments exempt from tax. The Commissioner General Betty Palaso advised Telikom's CEO Charles Litau in letters dated 6 March and 27 March 2013 that the IRC was not able to put the NEC Decision into effect as it would contravene the Income Tax Act 1959, that Telikom was obliged by law to deduct tax at the currently prescribed rate from the redundancy payments, and that the Income Tax Act would need to be amended, with retrospective effect, for the payments to be tax exempt.

27. The Commissioner General offered to discuss the issue with Telikom and the Department of Treasury, which is responsible for tax policy, if Telikom gave an authorisation to the IRC to discuss its taxpayer details with Treasury. However, there is no evidence of such an authorisation being given. I find that Telikom's attempts to put the Decision No 107/2011, paragraph 5 into effect, ceased upon receipt of the Commissioner General's letter of 27 March 2013.

28. Did Telikom try hard enough? Did Telikom ensure "as far as practicable" that Decision No 107/2011, paragraph 5 was carried out? No. It went close, but that was not sufficient. It could have negotiated with Treasury, to press for an amendment to the Income Tax Act. It could have paid the plaintiffs extra amounts to compensate them for the tax that was deducted and remitted to the IRC. It could have clearly explained its difficulties and engaged in meaningful consultation with the plaintiffs. I find that none of those things happened.

Conclusion re discharge of obligation

29. Telikom was obliged to exhaust all reasonable avenues in an attempt to find a way to lawfully make the redundancy payments tax exempt. It failed to discharge that obligation.

3	WAS THE 2011 MOA FORMULA THE CORRECT ONE TO APPLY?

30. The plaintiffs say no. Telikom says yes. Mr Kamuta for the plaintiffs submits that the 2011 MOA should not be given effect as it was not registered as an industrial award under the Industrial Relations Act Chapter 174. By contrast the 2010 Enterprise Agreement has been registered and is a valid and enforceable determination of the terms and conditions of employment of Telikom employees.

31. I am persuaded, however, by the submission of Mr Kuira that the 2011 MOA was not an agreement made under the Industrial Relations Act that was required to be registered. It was a one-off agreement between Telikom and the PNG Communication Workers Union. It only applied in relation to the 2011 Voluntary Redundancy Exit Plan, which was put in place pursuant to NEC Decision No 107/2011. It was not intended to replace the 2010 Enterprise Award, which remains in force; however, as pointed out by Mr Kuira it is doubtful in view of the Supreme Court decision in John Manau v Telikom (PNG) Ltd (2011) SC1146 whether its provisions can be regarded as setting terms and conditions of employment.

32. The 2011 MOA was expressed to apply to both members and non-members of the Union. I find that the formula in it for calculation of redundancy payments was the correct one. It was entered into in good faith with the union representing Telikom employees. It is neither unlawful nor unenforceable.

4	WHAT DECLARATIONS OR ORDERS SHOULD THE COURT MAKE?

33. As indicated earlier, the plaintiffs apply by the originating summons for 11 remedies, which in summary are:

1	A declaration that Telikom failed to comply with the NEC Decision.

2	A declaration that the NEC Decision is valid and effective.

3	A declaration that Telikom's failure to comply with the Decision is unlawful.

4	A declaration that the 2011 MOA is unlawful.

5	A declaration that the 2010 Enterprise Agreement is valid.

6	A declaration that the 2010 Enterprise Agreement is the basis of calculation.

7	A declaration that there was misrepresentation by Telikom by making payments without tax exemptions.

8	A declaration that there was misrepresentation by Telikom by making redundancy payments based on the 2011 MOA.

9	Costs.

10	Abridgment of time.

11	Such other orders as are deemed just by the Court.

34. Nos 1, 2, 3 and 5 follow naturally from the determinations of law in this judgment. Nos 4 and 6 are rejected, as I have determined that the 2011 MOA contains the correct formula. Nos 7 and 8 are rejected as I am satisfied that Telikom made a genuine attempt to do the right thing and there is no evidence that it was guilty of misrepresentation. No 9, costs, is not something that requires determination at this stage. No 11, "such further or other orders as the Court deems just", is a significant claim for relief. I propose to grant it by invoking Section 155(4) of the Constitution, which states:

Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.

35. I consider that it is proper and necessary to do justice in the circumstances of this case for the Court to make quite specific orders to ensure that the obligations of Telikom and the primary rights of the plaintiffs are enforced. The plaintiffs had a legally enforceable right to have their redundancy payments made exempt from tax. Telikom failed to discharge its obligation to ensure that that right was enforced. The National Court, having declared the existence of those rights and obligations, has the jurisdiction under Section 155(4) to craft and mould the remedies it grants to meet the circumstances of the case and to do justice (Avia Aihi v The State (No 1) [1981] PNGLR 81, SCR No 2 of 1981 [1981] PNGLR 150, Ume More v UPNG [1985] 401 at 402, Application Pursuant to s 155(4) by John Mua Nilkare (1997) SC536, Bill Skate and Peter O'Neil v Jeffrey Nape, Speaker of Parliament (2004) SC754, Gabriel Yer v Peter Yama (2009) SC996, Louis Medaing v Ramu Nico Management (MCC) Ltd (2011) SC1156).

36. Telikom needs to pay to each of the plaintiffs the amount of tax that it deducted from their gross payments and remitted to the IRC. When that happens, Telikom will have discharged its obligation to ensure that NEC Decision No 107/2011, paragraph 5 is carried out, and the rights of the plaintiffs will have been enforced. I will order that that happens in the following way:

(a)	the gross payment due to each plaintiff will be recalculated, to ensure that it is in accordance with the formula in the 2011 MOA.

(b)	the amount of tax due in respect of the gross payment will be checked, to ensure that the correct amount is deducted.

(c)	after making any necessary adjustments to (a) and (b), Telikom will make a special ex gratia payment, free of tax, to each plaintiff being the amount of tax in (b).

37. For example, the evidence shows that the lead plaintiff, Roslyn Yanoda, was employed by Telikom or its predecessor the Post and Telecommunications Corporation from 1992 to 2012. Her gross redundancy payment was K78,068.74. Salary or wages tax of K24,376.33 was deducted and remitted to the IRC. She received K53,692.41. The first two amounts will be recalculated and adjustments made, if necessary, and then Telikom will pay her the second amount. If it turns out that the first two amounts are correct, Telikom will be obliged to pay her, within a reasonable time, K24,376.33.

38. The reason I say that these orders are necessary to do justice is that the plaintiffs were lured into volunteering for redundancy by the legitimate expectation that their payouts would be exempt from tax. Telikom has conceded that. That was the National Government's policy. There was an NEC Decision. Telikom was obliged to implement it.

DECLARATIONS AND ORDERS

(1)	The relief sought in paragraphs 1, 2, 3 and 5 of the originating summons is granted generally and accordingly it is declared that:

(a)	the first defendant has failed to comply with National Executive Council Decision No 107 of 2011, para 5, regarding "exempt tax obligations on redundancy entitlements of Telikom and/or its subsidiaries staff affected by the implementation of the Implementation Study recommendations";

(b)	National Executive Council Decision No 107 of 2011, para 5 is a valid and effective executive decision made by the National Government and is a general policy of the Government approved by the National Executive Council that Telikom was obliged to carry out; and

(c)	the first defendant failed to comply with National Executive Council Decision No 107 of 2011, para 5, which failure is, in the circumstances of this particular case, unlawful.

(2)	The relief sought in paragraphs 4, 6, 7 and 8 of the originating summons is refused.

(3)	It is declared that the correct and lawful method of calculation of the redundancy payments of the plaintiffs is to:

(a)	calculate the gross payment due by application of the formula in the Memorandum of Agreement on 2011 Voluntary Redundancy Exit Plan;
(b)	calculate the amount of tax due and payable in respect of the gross payment and remit that amount to the Internal Revenue Commission;
(c)	pay to each plaintiff the sum of (a) – (b) + (b), ie (a), in respect of which sum, by order of this Court, no tax shall be due and payable by the plaintiffs.

(4)	The first defendant is liable to pay to each plaintiff the amount referred to in (3)(a) within a reasonable time after ratification of the amounts by the Court.

(5)	The first defendant shall forthwith recalculate the redundancy payments of the plaintiffs in accordance with the method of calculation in declaration (3), after taking account of payments already made to the plaintiffs and amounts of tax already remitted to the Internal Revenue Commission, and propose to the plaintiffs the amounts, if any, due and payable to the plaintiffs.

(6)	The first defendant and the plaintiffs shall within 21 days meet and discuss the amounts, if any, due and payable to the plaintiffs.

(7)	These proceedings shall return to Court at 9.00 am on 11 March 2015 or at such other time notified to the parties, at which time the parties will propose a draft consent order to give effect to their agreement or in the absence of agreement notify the Court that directions are required for a trial on assessment of the amounts, if any, due and payable to the plaintiffs or make any other application by notice of motion with a view to expeditious resolution of these proceedings.

(8)	The question of costs is deferred for submissions at the next hearing.

(9)	Time for entry of this order is abridged to the date of settlement by the Registrar, which shall take place forthwith.

Judgment accordingly.
________________________________________________________________
Kamutas Legal Services: Lawyers for the Plaintiffs
Litigation Manager, Telikom PNG: Lawyer for the first defendant
Solicitor-General: Lawyer for the Second Defendant