N7322

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS (HR) NO 12 OF 2016

NUG MAMTIRIN, PRESIDENT, PNG COMMUNICATION WORKERS UNION, FOR AND ON BEHALF OF 271 OTHERS
First Plaintiff

MICHAEL LANGOGO, TREASURER, PNG COMMUNICATION WORKERS UNION, FOR AND ON BEHALF OF 271 OTHERS
Second Plaintiff

LYDIA DAVID, WOMEN’S REP, PNG COMMUNICATION WORKERS UNION, FOR AND ON BEHALF OF 271 OTHERS
Third Plaintiff

PNG COMMUNICATION WORKERS UNION
Fourth Plaintiff

V

MICHAEL DONNELLY, CEO, TELIKOM PNG LIMITED 
First Defendant

MAHESH PATEL, CHAIRMAN, BOARD OF DIRECTORS, TELIKOM PNG LIMITED 
Second Defendant

TELIKOM PNG LIMITED 
Third Defendant

Waigani: Cannings J
2017: 19, 23 January, 21, 22, 23 February, 28 April, 11, 29 May, 17 August,
2018: 28 June

PRACTICE AND PROCEDURE – representative proceedings – requirements for commencement – abuse of process – summary dismissal.

LAW OF EMPLOYMENT – redundancy exercise – procedures and entitlements – whether registered industrial award applicable. 

HUMAN RIGHTS – whether redundancy exercise breached human rights of workers – rights to protection against harsh and oppressive acts, freedom of speech, freedom of assembly & association, freedom of employment  – Constitution, Sections 41, 46, 47 and 48. 

The first, second and third plaintiffs were employees of Telikom PNG Ltd (the third defendant) and office-bearers of the PNG Telecommunication Workers Union (the fourth plaintiff). In 2015-2016 Telikom conducted a redundancy exercise, dubbed the “spill and fill policy”, terminating the employment of the first, second and third plaintiffs and 271 other employees they claimed to represent. The plaintiffs were aggrieved by the manner in which the redundancy exercise was conducted and the amounts of termination payments made to them, which they claimed were in breach of the Enterprise Bargaining Agreement 2010, a registered industrial award governing Telikom employees, still operating in 2015-2016. They instituted proceedings against Telikom and its CEO and board chairman (first and second defendants), seeking damages for breach of contract (the Enterprise Bargaining Agreement 2010) and breach of human rights. The defendants argued that the proceedings should be summarily dismissed as an abuse of process as the requirements for commencement of representative proceedings had not been complied with. In the alternative the defendants argued that the Enterprise Bargaining Agreement 2010 expired in 2013 and did not govern the 2015-2016 redundancy exercise; that the Agreement only applied to Union members; that breach of the Agreement did not give rise to a breach of contract or a breach of human rights; and that a complete defence applied regarding ex-employees who had signed a deed of release. 

Held:

(1)	The proceedings were an abuse of process as the plaintiffs failed to comply with procedural requirements for commencement of representative proceedings in that the 271 former employees who the first, second and third plaintiffs claimed to represent had not each authorised those plaintiffs, and instructed the plaintiffs’ lawyers, to represent them. The proceedings were summarily dismissed for that reason.

(2)	As there was substantial evidence and argument on other issues, the court ruled on them obiter dictum.  

(3)	The Enterprise Bargaining Agreement 2010, which came into force on 9 September 2010 and was expressed to “remain in force for three years or until this Agreement is renewed or replaced by another, whichever first occurs”, was still in force in 2015-2016. The duration clause was ambiguous and the ambiguity should be resolved by an interpretation that would give certainty to terms and conditions of employment, including redundancy, rather than one that would generate uncertainty about such matters. 

(4)	The Enterprise Bargaining Agreement 2010 was an enforceable agreement between Telikom and Telikom employees who were Union members. It set the terms and conditions of employment of Telikom employees who were Union members, apart from those with a contract of employment that expressly excluded or superseded that Agreement, as it was a registered and gazetted industrial award under the Industrial Relations Act Chapter 174. It did not apply to employees who were not Union members.

(5)	The terms and conditions of employment, including redundancy, in the Enterprise Bargaining Agreement 2010, were tantamount to terms and conditions of each contract of employment between Telikom and its Union-member employees. To the extent that the Enterprise Bargaining Agreement 2010 was not complied with in regard to the manner in which the redundancy exercise was conducted and/or termination payments were calculated, a cause of action existed in breach of contract, giving rise to an entitlement to damages. 

(6)	Though the redundancy exercise might have been flawed due to not adhering to the procedures and method of calculation of termination payments in the Enterprise Bargaining Agreement 2010, there was sufficient evidence to show that it had been conducted carefully and methodically, not arbitrarily, and not so harshly or oppressively as to involve a breach of human rights under Sections 41, 46, 47 or 48 of the Constitution. No human rights breaches were proven by the plaintiffs. 

(7)	If liability had been established, Telikom had a complete defence in respect of those plaintiffs who had signed a deed of release, as there was insufficient evidence that any of them signed the deed under duress or undue influence.

(8)	Liability was not established against any of the defendants. The proceedings were wholly dismissed. The parties were ordered to bear their own costs. 

Cases cited

The following cases are cited in the judgment:

Central Provincial Government v NCDC (2013) N5262
Doriga Mahuru v Hon Lucas Dekena (2013) N5305
John Manau v Telikom (PNG) Ltd (2011) SC1146
Open Bay Timber Ltd v Hon Lucas Dekena (2013) N5109
Simon Mali v The State (2002) SC690
Tigam Malewo v Keith Faulkner (2009) SC960

APPLICATION

This was a trial on liability to determine the plaintiffs’ claim for damages in breach of contract and breach of human rights.

Counsel

J Napu, for the Plaintiffs
S Ketan, for the Defendants

28th June, 2018 

1.      CANNINGS J: The first, second and third plaintiffs were employees of Telikom PNG Ltd (the third defendant) and office-bearers of the PNG Telecommunication Workers Union (the fourth plaintiff). In 2015-2016 Telikom conducted a redundancy exercise, called the “spill and fill policy”, terminating the employment of the first, second and third plaintiffs and 271 other employees they claimed to represent. Telikom said the redundancy exercise was a transparent, merit-based process implemented in view of rapidly changing technologies in the telecommunications sector. 

2.     The plaintiffs were aggrieved by the manner in which the redundancy exercise was conducted and the amounts of termination payments made to them, which they claimed were in breach of the Enterprise Bargaining Agreement 2010, a registered industrial award governing Telikom employees, still operating in 2015-2016. They instituted proceedings, by writ of summons, against Telikom and its CEO and board chairman (first and second defendants). They seek damages for breaches of contract (the Enterprise Bargaining Agreement 2010) and breaches of human rights (their rights to protection against harsh and oppressive acts, freedom of speech, freedom of assembly and association and freedom of employment under Sections 41, 46, 47 and 48 of the Constitution). A trial has been conducted on the issue of liability. This judgment is a result of that trial. 

3.     The defendants argue that the proceedings should be summarily dismissed as an abuse of process as the requirements for commencement of representative proceedings were not complied with. 

4.     In the alternative the defendants argue that the Enterprise Bargaining Agreement 2010 expired in 2013 and did not govern the 2015-2016 redundancy exercise; that the Agreement only applied to Union members; that breach of the Agreement did not give rise to a breach of contract or a breach of human rights; and that a complete defence applied regarding ex-employees who had signed a deed of release, accepting what was paid to them and releasing Telikom from liability. The following issues arise:

(1)	Should the proceedings be summarily dismissed?

(2)	Was the Enterprise Bargaining Agreement 2010 operating in 2015-2016?

(3)	Did the Agreement only apply to Union members?

(4)	Did breach of the Agreement give rise to a breach of contract?

(5)	Were the plaintiffs’ human rights breached?

(6)	What was the effect of the deeds of release?

(7)	What orders should the Court make? 

1	SHOULD THE PROCEEDINGS BE SUMMARILY DISMISSED?

5.     Mr Ketan for the defendants relied on the leading Supreme Court cases of Simon Mali v The State (2002) SC690 and Tigam Malewo v Keith Faulkner (2009) SC960 to argue that if a person, such as the first, second and third plaintiffs, puts themselves forward as a plaintiff acting in a representative capacity for other persons there are procedural requirements that must be met:

(a)	all intended plaintiffs (including those the lead plaintiff claims to represent) must be named in the originating process;

(b)	each and every intended plaintiff must give specific instructions (evidenced in writing) to their lawyers or their personal representative to represent them;

(c)	all persons in whose name proceedings are commenced and who claims to represent other intended plaintiffs must produce an authority to the court to show that they were authorised by them to file proceedings as a class representative.

6.     Mr Ketan pointed out that, upon the filing of an amended writ and statement of claim on 5 June 2017, the plaintiffs appear to have complied with requirement (a). However, they have not complied with (b) or (c) so the proceedings are an abuse of process and must be dismissed.

7.     Mr Ketan is correct as to requirement (a). The amendments made to the writ and statement of claim clarified that the first, second and third plaintiffs commenced the proceedings on behalf of themselves and 271 other persons named in the schedule to the writ, headed “Telikom PNG Spill & Fill Exit List”. Each of the 271 persons listed in the schedule is readily identifiable due to the following details appearing next to each of their names: employee number, pay group (whether fortnightly or monthly), start date of employment with Telikom (the earliest being No 19 in the schedule, who started on 8 September 1979) and end date of employment with Telikom. 

8.     What about requirements (b) and (c)? They have not been met. There is no evidence that the 271 persons named in the schedule gave instructions to Napu & Co Lawyers to represent them in these proceedings. And the first, second and third plaintiffs, in whose names these proceedings were commenced, have not produced evidence of the authority conferred on them by any of the 271 persons named in the schedule to file the proceedings as a class representative.  

9.     The plaintiffs were given ample opportunity to correct these deficiencies. The filing of the amended writ and the inclusion of the schedule of names was a good start. But the other deficiencies remain. No good explanation has been provided as to why they have not been remedied. I am driven to the conclusion that the proceedings are an abuse of process for the purposes of Order 12, Rule 40(1)(c) of the National Court Rules. 

10.     In spite of the fact that this issue was raised prior to the trial by the defendants, and I nevertheless permitted the trial to proceed, the issue was not determined conclusively and always remained open to the hearing of final submissions at the trial. Having heard those submissions I conclude that failure to comply with these requirements is fatal. I consider that the only proper exercise of discretion in the circumstances – though the proceedings have progressed to trial and a substantial body of evidence has been presented and full submissions have been made on the merits of the plaintiffs’ claims – is to dismiss the proceedings as an abuse of process.

11.     However, as there was substantial evidence and argument on other issues, I will give my opinion on them obiter dictum, as it might be that some of the plaintiffs will have a cause of action worth pursuing individually or in regularised representative proceedings. 

2	WAS THE ENTERPRISE BARGAINING AGREEMENT 2010 OPERATING IN 2015-2016?

12.     The parties agree that the Enterprise Bargaining Agreement 2010 came into force on 9 September 2010 and that it had not been renewed or replaced by the time that the redundancy exercise took place in 2015-2016. They also agree that the question of whether the Agreement was in force in 2015-2016 depends on the interpretation of Section 5.0 (operation and duration of agreement), which stated:

Due to the current ongoing review of the policies the operation and implementation of the agreement is subjective to the review of HR policies and the HR Manual undertaken by the Consultative Committee.

5.1 This Agreement shall come into force as of 09th September 2010 and shall remain in force for three (3) years or until this Agreement is renewed or replaced by another, whichever first occurs.

5.2 This Agreement shall supersede the Enterprise Agreement of 2004.

5.3 No additional change shall be made to the employment conditions, during the whole period of operation of this Enterprise Agreement, subject to Sub-section 5.5. 

5.4 Industrial negotiations can take place if there is a breach of the Enterprise Agreement by either of the parties (Sub-section 9.3 refers).

5.5 Improved terms and conditions approved by the Board or as a result of the Company declaring Productivity gains during the operation of this Agreement.  [sic]

13.     Section 5.1 is the critical provision. The defendants argue that it means that the Agreement remained in force:

•	for a period of three years, or
•	until it was  renewed, or
•	until it was replaced by another agreement,

whichever of those three events occurred first.

14.     As the agreement had neither been renewed nor replaced, but the period of three years lapsed on 9 September 2013, the expiration of the three-year period was the first of the three events to have occurred and became the date that the Agreement ceased to be in force. It follows that the Agreement was not in force during the time of the redundancy exercise of 2015-2016.

15.     The plaintiffs argue that Section 5.1 means that the Agreement remained in force:

•	for a period of three years; or

•	until it was renewed or replaced by another agreement, whichever of those two events (renewal or replacement) occurred first.

16.     Though the period of three years lapsed on 9 September 2013, the agreement had neither been renewed nor replaced, so it remained in force until it was renewed or replaced. It follows that the Agreement was still in force during the time of the redundancy exercise of 2015-2016.

17.     On a literal reading of Section 5.1, both interpretations are available. It is ambiguous. In this situation, just when the court has to interpret an ambiguous statutory provision, it is useful to consider the context of the provision and the nature and purpose of the document in which it is contained and the comparative effect in practice of the competing interpretations (Open Bay Timber Ltd v Hon Lucas Dekena (2013) N5109, Central Provincial Government v NCDC (2013) N5262, Doriga Mahuru v Hon Lucas Dekena (2013) N5305).

18.     The ambiguity should be resolved by an interpretation that would give certainty to terms and conditions of employment, including redundancy, rather than one that would generate uncertainty about such matters. If the defendants’ interpretation prevailed, there would be no general written terms and conditions of employment for Telikom employees, apart from those applying under specific written contracts of employment. This would lead to uncertainty. If the plaintiffs’ interpretation prevailed there would be certainty about the terms and conditions of employment, including redundancy situations. I favour the plaintiffs’ interpretation. In my opinion the Enterprise Bargaining Agreement 2010 was in force during the time of the 2015-2016 redundancy exercise. 

3	DID THE AGREEMENT ONLY APPLY TO UNION MEMBERS?

19.     The defendants argue that the Enterprise Bargaining Agreement 2010 only applied to Union members. The plaintiffs argue that it applied to all Telikom employees, whether they were Union members or not. The plaintiffs point to Section 40.1 where “employee” is defined in the following terms:

“Employee” shall mean all permanent employees including probationary officers who have served more than one (1) year with Telikom PNG Limited.

20.     I do not think that that is conclusive of the issue. The Agreement does not expressly state that it applies to all Telikom employees, Union members or not. I consider that to resolve this issue it is necessary to identify the parties to the Agreement, who are described in the opening recital (or preamble) as follows:

MEMORANDUM OF AGREEMENT

Memorandum of Agreement made this ninth (09th) day of September, 2010

BETWEEN:	Telikom PNG Limited (“Telikom”), a company incorporated under the Companies Act 1997, of PO Box 6013, Waigani, National Capital District and having its registered office at Telikom Rumana, Kumul Avenue, Waigani, National Capital District.

AND:	the PNG Communications Workers Union members who are Telikom employees, of care of PO Box 3088, Boroko, National Capital District (“Union”).

21.     In short, the parties are expressed to be, on the hand, Telkom, and on the other hand, Union members who are Telikom employees. 

22.     Interestingly the Union is not, in the opening recital at least, regarded as a party. However, a different picture emerges in Section 67.0 (signatures), where it is stated:

It is agreed by both parties [which are not immediately named] that this signature block covers Agreements Part (A2.1), Enterprise Consolidated Agreement and Part (A2.2) Enterprise Redundancy Agreement of Telikom of Telikom PNG Limited Enterprise Agreement 2010.

23.     The signature block then states:

SIGNED FOR AND BEHALF OF TELIKOM PNG LIMITED …

SIGNED FOR AND ON BEHALF OF THE PAPUA NEW GUINEA COMMUNICATION WORKERS UNION …

24.     The combined effect of the opening recital and the signature block is that the parties to the agreement are:

•	on the one hand, Telikom PNG Ltd; and 
•	on the hand, the Union and its members who were Telikom employees.

25.     In the absence of an express intention to make the Agreement apply to all Telikom employees, I conclude that the Agreement only applied to Union members. It was an enforceable agreement between Telikom and Telikom employees who were Union members. It set the terms and conditions of employment, including redundancy, of Telikom employees who were Union members, apart from those with a contract of employment that expressly excluded or superseded that Agreement.

26.     The Enterprise Bargaining Agreement 2010 did not apply to employees who were not Union members.

4	DID BREACH OF THE AGREEMENT GIVE RISE TO A BREACH OF CONTRACT?

27.     Yes. The terms and conditions of employment, including redundancy, in the Enterprise Bargaining Agreement 2010, were tantamount to terms and conditions of each contract of employment between Telikom and its Union-member employees. There is evidence that the Agreement was registered under Section 33 of the Industrial Relations Act Chapter 174 and notified in the National Gazette on 17 November 2011. It thereupon became a binding and enforceable agreement, setting the terms and conditions of employment for those employees who were parties to the Agreement, viz members of the PNG Telecommunication Workers Union (John Manau v Telikom (PNG) Ltd (2011) SC1146). 

28.     To the extent that the Enterprise Bargaining Agreement 2010 was not complied with in regard to the manner in which the 2015-2016 redundancy exercise was conducted and/or termination payments were calculated, a cause of action existed in breach of contract, giving rise to an entitlement to damages. 

5	WERE THE PLAINTIFFS’ HUMAN RIGHTS BREACHED?

29.     Though the redundancy exercise might have been flawed due to not adhering to the procedures and method of calculation of termination payments in the Enterprise Bargaining Agreement 2010, the plaintiffs have fallen well short of proving that their human rights were breached. Telikom’s human resources manager, Priscilla Salle Ao, gave oral evidence and was subject to intense cross-examination. She explained the development of a “People & Capability Policy Manual”, which led to the spill and fill policy, that was approved after careful consideration by the Telikom board. 

30.     Her evidence supports the defendants’ proposition that the spill and fill policy and the 2015-2016 redundancy exercise was generally a merit-based and transparent process. It was conducted carefully and methodically, not arbitrarily, and not so harshly or oppressively as to involve a breach of human rights under Sections 41, 46, 47 or 48 of the Constitution. I am not satisfied that any human rights breaches were proven by the plaintiffs. 

6	WHAT WAS THE EFFECT OF THE DEEDS OF RELEASE?

31.     The terms of the deeds of release signed by approximately 80 of the 271 ex-employees in the schedule to the writ are clear, and state, amongst other things:

In consideration of the payments and benefits set out herein, the receipt of which is hereby acknowledged, without any admission of liability by the Releasee [Telikom PNG Ltd] and in complete settlement, satisfaction, compromise and discharge of all actions, claims, proceedings, accounts, demands, costs and expenses whatsoever which the Releasor [the employee] now has, will have or at any time prior to the date of this Deed has against the Releasor DOES HEREBY FOREVER RELEASES AND DISCHARGES the Releasee, its servants, employees or agents from same and covenants to indemnify and to keep indemnified at all times the Releasee, its servants or employees against all actions, suits, claims, costs and demands by the Releasor, his heirs, executors or agents whatsoever and howsoever arising in respect of the abovementioned cessation of employment. [sic]

32.     If liability had been established, I am of the view that Telikom would have had a complete defence in respect of those plaintiffs who had signed a deed of release. There is insufficient evidence that any of them signed the deed under duress or undue influence.

7	WHAT ORDERS SHOULD THE COURT MAKE?

33.     The proceedings must be wholly dismissed. The plaintiffs have raised some valid issues and the proceedings have not been brought in bad faith. Telikom could have conducted the 2015-2016 redundancy program more carefully and judiciously. In fact, in my view Telikom was bound as a matter of law to apply the provisions of the Enterprise Bargaining Agreement 2010 in relation to the proposed redundancy of any of its employees who were Union members who did not have a contract of employment that expressly excluded or superseded the 2010 Agreement. In these circumstances it is appropriate that the parties bear their own costs. 

ORDER 

(1)	The proceedings are wholly dismissed.

(2)	The parties bear their own costs. 

(3)	The proceedings are thereby determined and the file is closed.

Judgment accordingly.
______________________________________________________________
Napu & Company Lawyers:  Lawyers for the Plaintiffs	
Ketan Lawyers:  Lawyers for the Defendants