N6577
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
	
WS NO 651 OF 2015

APOLONIA STEVEN
Plaintiff

V

RAM KC,  
Store Manager, Modilon Retail Store
First Defendant

SHIRLEY TSANG, 
1st Managing Director, Modilon Retail Store
Second Defendant

MARTIN TSANG, 
2ndmanaging Director, Modilon Retail Store
Third Defendant

M & S TSANG LIMITED
Fourth Defendant

	Madang : Cannings J	
   		2015: 1, 2 December
2016:  9 December

HUMAN RIGHTS – application to contracts of employment – Constitution, Sections 36 (freedom from inhuman treatment); 41 (proscribed acts); 59 (principles of natural justice).
	
LAW OF EMPLOYMENT –oral contract of service – termination of contract – whether contract lawfully terminated for cause; Employment Act, Section 36 (grounds for termination of contract) – whether employee paid proper amount of salary in lieu of notice; Employment Act, Section 35 (termination of contract without notice) – whether employee entitled to salary in lieu of notice; Employment Act, Section 34 (notice of termination).

The fourth defendant terminated the plaintiff’s employment on the grounds of absence from duty, failure to follow instructions and giving improper instructions to other employees. The plaintiff sued the fourth defendant and three members of its management team, claiming damages for wrongful dismissal, and argued that the defendants breached the contract of employment by (1) breaching her human rights under the Constitution, Sections 36(freedom from inhuman treatment); 41(proscribed acts);and 59(principles of natural justice); and by (2) failing to pay her money in lieu of notice as required by Section 34 (notice of termination) of the Employment Act. The defendants denied liability and argued that there had been no breach of human rights and no breach of the Employment Act as the plaintiff had been lawfully terminated for cause under Section 36(1) of the Employment Act. A trial was conducted on the issue of liability.

Held:

(1)	Human rights, as conferred by the Constitution, have universal application in Papua New Guinea and can properly be regarded as implied terms of any contract of employment. 

(2)	The plaintiff failed to prove that there had been any breach by the defendants of her human rights, as she had not been dealt with inhumanely, harshly or oppressively or in denial of the principles of natural justice. 

(3)	The contract between the plaintiff and the fourth defendant was an oral contract of service. Such a contract can be terminated by an employer at any time on any ground without notice provided that, if the contract is not lawfully terminated for cause under Section 36(1) of the Employment Act, an amount of salary for the number of weeks of the notice period is paid to the employee under Sections 34 and 35 of the Employment Act. If a contract is lawfully terminated for cause no salary in lieu of notice is payable.

(4)	As the plaintiff was arguing that the fourth defendant unlawfully terminated the contract for cause she had to prove that none of the grounds of her termination fell within Section 36(1) of the Employment Act. 

(5)	The plaintiff failed to prove that none of those grounds applied. There was sufficient evidence that in fact the plaintiff had wilfully disobeyed lawful and reasonable orders and misconducted herself for the purposes of Sections 36(1)(a)(i) and (ii) of the Employment Act. This was a case of lawful termination for cause. Therefore the fourth defendant was not obliged to pay salary instead of notice.

(6)	In fact, the fourth defendant paid the plaintiff one week’s salary in lieu of notice, which it was not obliged to pay; and later attempted to pay the plaintiff an additional K1,000.00 to avoid litigation, an amount it was also not obliged to pay. 

(7)	The plaintiff failed to establish a cause of action for breach of contract and the proceedings were dismissed. The parties were ordered to pay their own costs. 

Cases cited

The following cases are cited in the judgment:

Ayleen Bure v Robert Kapo (2005) N2902
Bal Bar and Stettin Bay Lumber Company Limited v Maima Kora (2008) N3290
Bernbert Toa v Ly Cuong-Long (2008) N3471
Jimmy Malai v PNG Teachers Association [1992] PNGLR 568
Joe Kala v New Britain Palm Oil Limited (2007) N3125
Meta v Kumono (2012) N4958
Pain v The State (2012) N4708
Paru v Kotigama & Bmobile-Vodafone (2015) N6089
Petrus and Gawi v Telikom PNG Ltd (2008) N3373
Podas v Divine Word University (2011) N4395
Re Conditions of Detention at Beon Correctional Institution (2006) N2969Baisom Konori v Jant Ltd (2015) N5868
Vere Kilao v Bernard Tiau (2007) N5000
Vitus Sukuramu v New Britain Palm Oil Limited (2007) N3124

TRIAL

This was a trial of a wrongful dismissal action. 

Counsel:
M Avasi, with leave, for the Plaintiff
G Purvey, for the Defendants 

9th December, 2016

1.     CANNINGS J:  The plaintiff, Apolonia Steven, is seeking damages for wrongful dismissal against the defendants. 

2.    The plaintiff’s former employer, M & S Tsang Limited, which operates retail and wholesale businesses in Madang, is the fourth defendant. The other three defendants are members of the fourth defendant’s management team. The first defendant, Mr Ram KC, is the manager of the store at which the plaintiff was employed as a senior shop assistant. The second and third defendants, Shirley Tsang and Martin Tsang, are the owners, directors and managing directors of the fourth defendant. 

3. The plaintiff commenced employment under an oral contract of employment on 3 April 2006. Her employment was terminated without notice and with immediate effect on 30 December 2014 after a meeting with Mrs Tsang. The grounds of termination were:

(a)	too many absences from work; 
(b)	failure to follow instructions; and 
(c)	giving improper instructions to other employees.

4.   The particular allegations regarding grounds (b) and (c) were that:

•	the plaintiff, who worked in the manchester department of the store, had given instructions to other employees that no material was to be cut for sale in her absence, 
•	this had led to many complaints from customers and a downturn in business, and 
•	the plaintiff had been instructed by the store manager, Mr Ram, to cease this practice but had not followed instructions and continued the practice.
	
5.    On 2 January 2015 the plaintiff was paid K2, 634.16 as finish pay, which included K134.40 as one week’s salary in lieu of notice. 

6.   The plaintiff, who was ably represented, with the leave of the Court, by Mr Avasi, argues that the defendants breached the contract of employment by: 

(1) breaching her human rights under the Constitution, Sections 36(freedom from inhuman treatment); 41(proscribed acts); and 59(principles of natural justice); and 

(2) failing to pay her money in lieu of notice as required by Section 34 (notice of termination) of the Employment Act. 

7.  The defendants deny liability and argue that there was no breach of human rights and no breach of the Employment Act.

8.   The plaintiff gave oral evidence and was subject to cross-examination regarding five supporting affidavits. For the defendants, Mrs Tsang gave oral evidence and was subject to cross-examination regarding 16 supporting affidavits. 

9.   The central issue is whether the plaintiff has established a cause of action in breach of contract (wrongful dismissal). The specific issues are whether a breach of contract has been committed due to a breach of the plaintiff’s human rights by any of the defendants, and whether any breach of contract has been committed due to the fourth defendant’s failure to pay the proper amount of money in lieu of notice. 

(1)	WAS THERE ANY BREACH OF HUMAN RIGHTS?

10.  Human rights, as conferred by the Constitution, have universal application in Papua New Guinea and can properly be regarded as implied terms of any contract of employment (Paru v Kotigama & Bmobile-Vodafone (2015) N6089). 

11.  The plaintiff argues that the defendants breached the contract of employment by breaching her human rights under the Constitution, Sections 36(freedom from inhuman treatment); 41(proscribed acts); and 59(principles of natural justice). She argues that on 30 December 2014 she was aggressively interrogated by Mrs Tsang over a trivial matter, defamed, verbally abused and sacked on the spot, after serving the company for more than eight years, without notice and without being given a right to be heard, and that the defendants failed to consider that she is a mother and a breadwinner in her family and that the termination of her employment was unlawful, unjust and unfair. 

Section 36

12.    The plaintiff argues that the treatment meted out to her was inhumane, so much so that Section 36 of the Constitution was breached. 

13.   As I pointed out in Bernbert Toa v Ly Cuong-Long (2008) N3471, Section 36(1) is one of the most important human rights provisions in the Constitution. It states:

No person shall be submitted to torture (whether physical or mental), or to treatment or punishment that is cruel or otherwise inhuman, or is inconsistent with respect for the inherent dignity of the human person.

14.    Section 36(1) of the Constitution confers on all persons the right not to be submitted to:

•	torture (whether physical or mental);
•	treatment that is cruel, inhuman or inconsistent with respect for the inherent dignity of the human person;
•	punishment that is cruel, inhuman treatment or inconsistent with respect for the inherent dignity of the human person.

15.   For a person’s conduct to amount to torture or otherwise inhuman treatment of another under Section 36(1), it must be conduct that is committed without the consent of the recipient and done with the intent and effect of treating the recipient as less than human (Baisom Konori v Jant Ltd (2015) N5868). Section 36 is a provision most often invoked where people have been detained in custody in conditions that can be described as inhuman (eg Re Conditions of Detention at Beon Correctional Institution (2006) N2969). I am not aware of any case in which Section 36(1) has been enforced in an employment context. 

16.    If an employer was running a sweatshop-style factory and employees were underpaid and treated poorly, Section 36(1) could appropriately be relied on to make orders to enforce the rights of the workers. But the present case is far removed from that scenario. There is no reasonable argument to say that the plaintiff was treated inhumanely by any of the defendants. 

Section 41

17.  The plaintiff alleges that the defendants treated her harshly and oppressively, in a way that breached her rights under Section 41 (proscribed acts) which states:

(1)	Notwithstanding anything to the contrary in any other provision of any law, any act that is done under a valid law but in the particular case—

(a)	is harsh or oppressive; or
(b)	is not warranted by, or is disproportionate to, the requirements of the particular circumstances or of the particular case; or
(c)	is otherwise not, in the particular circumstances, reasonably justifiable in a democratic society having a proper regard for the rights and dignity of mankind,

is an unlawful act.

(2)	The burden of showing that Subsection (1)(a), (b) or (c) applies in respect of an act is on the party alleging it, and may be discharged on the balance of probabilities.

(3)	Nothing in this section affects the operation of any other law under which an act may be held to be unlawful or invalid.

18.    Section 41 proscribes (ie prohibits) and gives protection against seven sorts of acts. Even if done under a valid law and notwithstanding anything to the contrary in any law, an act is unlawful if it is, in the particular case:

•	harsh; or
•	oppressive; or
•	not warranted by the requirements of the particular circumstances; or
•	disproportionate to the requirements of the particular circumstances; or
•	not warranted by the requirements of the particular case; or
•	disproportionate to the requirements of the particular case; or
•	otherwise not, in the particular circumstances, reasonably justifiable in a democratic society having a proper regard for the rights and dignity of mankind (see Petrus and Gawi v Telikom PNG Ltd (2008) N3373; Meta v Kumono (2012) N4958, Pain v The State (2012) N4708).

19.    Under Section 41(2) the burden of showing that another person has committed an act falling within one of the seven categories of acts proscribed by Section 41(1) is on the party alleging it.

20.   The plaintiff has failed to discharge that burden. Having said that, I consider that the defendants could have managed the situation better. They could have handled the issues about the plaintiff’s attendance record more decisively and given her a clear warning that she needed to improve her performance. Complaints about customers being turned away because the plaintiff would not let other staff cut material, should have been brought to Mrs Tsang’s attention sooner than they were. The plaintiff should have been clearly warned that her job was on the line. 

21.   However, these are management criticisms, not legal criticisms. I am satisfied that the defendants did not engage in harsh or oppressive conduct or act in a way unwarranted or disproportionate to the circumstances of the case that they were dealing with, or otherwise proscribed by Section 41(1) of the Constitution. 

Section 59

22.   The plaintiff’s employment was terminated on 30 December 2014 without notice and without her being given a right to be heard on the allegations against her. She says that the reasons given for termination of her employment were baseless and she was not given proper reasons. She argues that she has been denied natural justice under Section 59 (principles of natural justice) of the Constitution, which states:

(1)	Subject to this Constitution and to any statute, the principles of natural justice are the rules of the underlying law known by that name developed for control of judicial and administrative proceedings.

(2)	The minimum requirement of natural justice is the duty to act fairly and, in principle, to be seen to act fairly.

23.    To support these arguments the plaintiff referred to my decisions in Vitus Sukuramu v New Britain Palm Oil Limited (2007) N3124 and Joe Kala v New Britain Palm Oil Limited (2007) N3125, in which I formulated a new rule of law, appropriate to the circumstances of the country, under the Underlying Law Act 2000. I ruled that the ‘fire at will’ principle of the common law that allows employers to terminate a contract of employment for any reason without giving a right to be heard and without providing reasons was no longer appropriate to the circumstances of Papua New Guinea. I ruled that the implied terms of a contract of employment include the principles of natural justice and the constitutional right of protection against harsh or oppressive or other proscribed acts. That meant an employee had a right to be heard before termination of employment. I applied that rule in several cases that subsequently came before me (eg Vere Kilao v Bernard Tiau (2007) N5000,Bal Bar and Stettin Bay Lumber Company Limited v Maima Kora (2008) N3290, Bernbert Toa v Ly Cuong-Long (2008) N3471).

24.   On 30 October 2008 in New Britain Palm Oil Ltd v Vitus Sukuramu (2008) SC946 the Supreme Court (constituted under Section 3 of the Supreme Court Act by two Judges, Sakora J and Lay J) upheld an appeal by the employer against that new rule. My decision in the National Court was overturned. The Supreme Court ruled that the National Court had in the circumstances of that case no power to develop the underlying law as the Supreme Court had already declared the underlying law – reaffirming the fire-at-will principle – in Jimmy Malai v PNG Teachers Association [1992] PNGLR 568. 

25.    As my decision was overruled, the underlying law has, as I explained in Podas v Divine Word University (2011) N4395, reverted to the common law position: the fire-at-will principle has been reinstated. An employer can hire and fire at will, with or without good reasons and without giving a right to be heard. These are the general principles, which can be displaced by the terms of a contract of employment (eg Ayleen Bure v Robert Kapo (2005) N2902). Put simply an employee has no right to be heard before being sacked unless his or her contract of employment says so. In the present case nothing in the plaintiff’s contract gave her a right to be heard. She was not given a right to be heard. That is inconsequential. She argues that the reasons given for sacking her have no substance. That is also inconsequential. She was able to be sacked for good reasons or bad reasons or no reasons. That is the law, as declared by the Supreme Court, that I am obliged to apply. 

Conclusion re human rights breaches 

26.    The plaintiff has not proven that the defendants committed any breach of human rights.
	
(2)	WAS THERE ANY BREACH OF THE EMPLOYMENT ACT?

27.   The plaintiff argues that the fourth defendant committed a breach of contract by not paying her four weeks salary in lieu of notice as required by Section 34(4)(d) of the Employment Act. The argument is based on a proper factual foundation as the plaintiff was paid only one week’s salary in lieu of notice, not four. The question is: did she have to be paid four weeks salary in lieu of notice? Or was one week sufficient? 

28.   As this was an oral contract the fourth defendant was entitled to terminate it without notice, and this could be done in two ways. First, under Section 36(1) (ground for termination of contract) of the Employment Act, which is often called ‘termination for cause’ as it conveys the notion that the employee has done something wrong that warrants instant dismissal. Section 36(1) states:

An employer may terminate a contract of service without notice or payment instead of notice—

(a)	where the employee—

(i)	wilfully disobeys a lawful and reasonable order; or
(ii)	misconducts himself by an act of omission or commission that is inconsistent with the due and faithful discharge of his duties; or
(iii)	is guilty of a fraud or dishonesty; or
(iv)	is habitually neglectful of his duties; or
(v)	is imprisoned for a period exceeding seven days; or
(vi)	is continually absent from his employment without leave or reasonable excuse; or
(vii)	is convicted of an offence or contravention of this Act or any other law relating to employment; or

(b)	on any other ground on which he would be entitled to terminate the contract without notice at common law.

29.   The second way that termination without notice can be lawfully effected is under Section 35(2) (termination of contract without notice) of the Employment Act, which states:

Where a party to a contract has given notice of intention to terminate under Section 34, either party may, without waiting for the expiry of that notice, terminate the contract by paying to the other party a sum equal to the amount of salary that would have accrued to the employee during the period of the notice.

30.    Periods of notice are set out in Section 34(4) (notice of termination), which states:

Where there is no provision in a contract of service for notice of intention to terminate, the length of the notice shall be not less than—

(a)	one day's notice if the employee has been employed for less than four weeks; or
(b)	one week's notice if the employee has been employed for not less than four weeks and for less than one year; or
(c)	two weeks' notice if the employee has been employed for not less than one year and for less than five years; or
(d)	four weeks' notice if the employee has been employed for five years or more.

31.   The notice period varies according to the period for which the employee has been employed. Provided that an employer pays to the dismissed employee the amount of salary that would have accrued to the employee during the notice period, termination without notice will be lawful. Thus:
	
•	if employment is terminated for cause, no salary in lieu of notice has to be paid;

•	if employment is not terminated for cause, notice of termination must be given OR salary in lieu of notice must be paid, and to work out the notice period you apply Section 34(4) of the Employment Act.

32.   Who bears the onus of proving whether or not it was properly and lawfully a case of termination for cause? The plaintiff. 

33.  As the plaintiff is arguing that the fourth defendant unlawfully terminated the contract for cause she has to prove that none of the grounds of her termination fell within Section 36(1) of the Employment Act.

34.   After considering the extensive evidence from both sides concerning the plaintiff’s attendance record and work performance, and in particular the issue of whether the plaintiff had given instructions to other employees that no material was to be cut for sale in her absence and that she had been instructed to cease this practice but had not followed instructions, I am persuaded by the thorough and convincing submissions of Mr Purvey, for the defendants, to find that:

•	the plaintiff was instructed at a staff meeting in November 2014 to stop telling her staff not to cut material in her absence, but she had not abandoned that practice and it remained an unresolved problem until the date of her termination, 30 December 2014;

•	the plaintiff wilfully disobeyed lawful and reasonable orders and misconducted herself for the purposes of Sections 36(1)(a)(i) and (ii) of the Employment Act;

•	the plaintiff has failed to prove that none of the grounds in Section 36(1) applied;

•	this was a case of lawful termination for cause;  

•	therefore the fourth defendant was not obliged to pay any salary instead of notice (which, in this case, pursuant to Section 34(4)(d) of the Employment Act, would have been four weeks);

•	in fact, the fourth defendant paid the plaintiff one week’s salary in lieu of notice, which it was not obliged to pay, and later attempted to pay the plaintiff an additional K1,000.00 to avoid litigation, an amount it was also not obliged to pay.

Conclusion re alleged breach of Employment Act

35.    The plaintiff has not proven that the defendants committed any breach of the Employment Act.

CONCLUSION

36.    The plaintiff has failed to prove her case and the proceedings will be dismissed. As to costs, I take the same approach I have taken in a number of cases in which employees have taken their former employers to court for wrongful dismissal, and lost. In the normal course of events if I applied the rule of thumb as to costs I would order the plaintiff to pay the defendants’ costs. However when making any order for costs the court must exercise its discretion according to the circumstances of the case and in the interests of justice. The plaintiff is an individual citizen who has taken on a major and prominent employer, and lost. She is in a difficult emotional and financial position. She has raised some valid issues. She should not be visited with an order to pay the defendants’ costs. That would be harsh and oppressive. The Court must strive to make access to justice easy and cheap and to keep its doors open to those persons who have genuine grievances and do not act for any improper motive. I will order the parties to bear their own costs.

There is one other thing. The plaintiff in 2015 refused to accept a cheque for K1,000.00 that the defendants attempted to give her, as an incentive to avoid litigation. She told them she would not accept it as it was a “bribe”. The defendants of their own volition paid that sum into Court on 17 September 2015. I consider that the defendants’ actions were proper and taken in good faith. I need to make a decision on what happens to this money. On the one hand, there is an argument to say it should go back to the defendants as they have won the case. On the other hand, it should go to the plaintiff as she misguidedly refused it. I think the interests of justice are best served by giving it to the plaintiff, and that is what I will order.

ORDER

37.

(1)	The plaintiff has failed to establish a cause of action and the proceedings are dismissed.

(2)	The Registrar of the National Court shall by 9 February 2017 pay to the plaintiff the sum of K1, 000.00, which was paid into Court by the defendants on 17 September 2015. 

(3)	The parties shall bear their own costs.

Judgment accordingly,

____________________________________________________
Young & Williams Lawyers:     Lawyers for the defendants