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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 30 OF 2020 (COMM)
BETWEEN:
DANIEL KOIAM
Plaintiff
V
FRONTIER EQUITIES LIMITED
First Defendant
FRANCIS MICHAEL KRAMER in his capacity as a Director and Chairman of the Board of Directors of Frontier Equities Limited
Second Defendant
ADAM KRAMER in his capacity as a Director of Frontier Equities Limited
Third Defendant
WAIGANI: ANIS J
15 APRIL, 3 MAY, 20 DECEMBER 2024
BREACH OF EMPLOYMENT CONTRACT – Claim for breach of contract - claim for purported outstanding entitlements – claim premised on 2 contracts of employment – one signed and the other oral – consideration – whether the written contract existed after it was terminated – what were the terms of conditions of employment when the plaintiff was re-employed by the defendants? – whether plaintiff was employed under oral agreement when he was re-employed – or whether the written contract existed or continued by the actions or conduct of the parties – whether there was breach of contract – consideration - ruling
Cases cited
Papua New Guinean cases
PNG Forest Products Ltd v. Ossima Resources Ltd (2013) SC1275
NKW Holdings Ltd v. Paladin Solutions PNG Ltd (2020) N8339
Nivani Limited v. Coconut Products Limited (2016) N6582
Awesa v. PNG Power Ltd (2019) SC1848
Common Constructions Ltd v. TSC Contractors (PNG) Ltd (2017) N6681
Overseas Cases
Household Fire Insurance Co v Grant (1879) 3 Ex D 216
Spar Shipping AS v. Grand China Logistics Holding (Group) Co. Ltd [2015] EWHC 718 (Comm)
Eminence Property Developments Ltd v. Heaney [2010] EWCA Civ 1168 at [61]
Counsel:
N Kopunye for the plaintiff
B Sinen for the defendants
JUDGMENT ON LIABILITY
1. ANIS J: This was a trial on liability. The plaintiff was aggrieved, after he had resigned from his employment with the first defendant, that not all his final entitlements and benefits were fully settled. He files this proceeding on 21 August 2020. He later amended his Statement of Claim on 28 December 2022 (ASoC). The plaintiff asserts that according to the terms and conditions of his employment contracts, he should have been paid accordingly when he resigned from his employment with the first defendant in May of 2020. The plaintiff also claims that he suffered damages for breach of contract. He asserts that the defendants had repudiated his employment contract when they no longer wanted to be bound by its terms and conditions but instead made a new offer of employment to him which were outside his then existing contract. The plaintiff asserts that he responded by tendering in his resignation, and now he is suing for breach of contract.
2. The trial was conducted on 15 April 2024. Presentation of closing submissions were heard on 3 May 2024 before I reserved my ruling to a date to be advised.
3. This is my ruling on liability.
BACKGROUND
4. The plaintiff is a former employee of the first defendant. He commenced employment there in 2013 as the first defendant’s Chief Investment Officer/Manager (CIO). His employment contract was written, and it was signed on 2 April 2013 (2013 Contract) for a term of 3 years. He commenced employment there where he occupied the said position. On 20 April 2015, the plaintiff resigned from his 2013 Contract to take up further studies.
5. The plaintiff later decided against his intention to take up further studies. He was re-employed by the first defendant on or about 5 June 2015. Sometimes in 2015, he was appointed Acting CEO of the first defendant.
6. In 2019, the plaintiff’s position with the first defendant was changed from Acting CEO/CIO to Senior Analyst. The plaintiff inquired about that. The plaintiff was dissatisfied with the response or lack of it, so, on 2 April 2020, the plaintiff gave 1 month notice of his intention to resign from employment to the first defendant. On 2 May 2020, the plaintiff resigned and later filed this proceeding.
EVIDENCE
7. The parties gave oral and written testimonies. For the plaintiff, he tendered two of his own affidavits which were marked as exhibits P1 and P2. He also gave sworn evidence and was subjected to cross-examination by the defendants. The defendants tendered a total of 4 affidavits which were marked as exhibits D1, D2, D3 and D4. Three of the affidavits were tendered by the second defendant. The fourth affidavit was sworn and filed by Geoffery Palem of the defendants. Both witnesses also gave sworn evidence and were subjected to cross-examination by the plaintiff.
ISSUES
8. The parties cited more than 20 issues which they said the Court should consider. The first issue to determine, in my view, is the 2013 Contract, that is, whether it ended or had extended past the time when the plaintiff resigned to undergo further studies in April of 2015.
9. I will address that first before I consider what other relevant issues should follow next.
WHETHER THE 2013 CONTRACT ENDED WHEN THE PLAINTIFF RESIGNED.
10. A copy of the 2013 Contract is adduced in evidence at Annexure B to Exhibit P1. The evidence shows that the plaintiff had given notice by email to the first defendant of his decision to resign in April of 2015. The evidence also shows that the plaintiff was paid out his final pay as per his resignation in 2015, that is, as per annexures F, G, H and I to Exhibit D1.
11. The evidence in general or collectively also shows that when the plaintiff returned back to work with the first defendant or when he was re-employed, he worked as CIO. The defendants claim that his employment then was oral and was premised on the same base salary that he was on under the 2013 Contract. So, it is not disputed by the parties that when the plaintiff was re-employed, he was paid at the same base salary as the one which was offered to him in the 2013 Contract.
12. It is obvious, premised on the undisputed evidence of the parties, that the plaintiff resigned from his 2013 Contract on or about 15 April of 2015. The 2013 Contract was therefore terminated on the said date. I also find as a matter of fact that when the plaintiff returned and was re-employed by the first defendant, no written employment contract was signed. However, I also find that the plaintiff was employed primarily premised on the terms of his earlier contract which was the 2013 Contract.
13. The real issue, it seems to me, is what was agreed in the oral agreement when the plaintiff was re-employed by the first defendant. Having considered the evidence of the parties, I make the following observations:
14. The plaintiff asserts at paras. 10, 11, 12 and 13 in his SoC as follows:
“10. The Written Contract was for a term of 3 years and expired on about 2nd April 2016.
15. In response, the defendants stated at para. 5 in their Amended Defence filed 8 February 2023 (AD) as follows:
“5. In answer to paragraph 9, 10, 11 and 12 of the Amended Statement of Claim, the Defendants joins issue and says as follows:
(1) The Defendants admit paragraph 9, 10 of the Amended Statement of Claim that the Plaintiff’s Written Contract of Employment was for three years commencing 2
April 2013 but otherwise denies the balance of the paragraph and further says that:
(a) The Written Contract of Employment did not expire by effluxion of time but was early terminated following the Plaintiff’s resignation in or about 20 April 2015 to pursue further studies.
(b) The Plaintiff was paid his full outstanding entitlements following his resignation.
......
(c) The Plaintiff did not pursue his further studies and was re-employed by the First Defendant under an oral contract that emerged
the Plaintiff as a Consultant performing the functions of Acting Chief Executive Officer and Chief Investment Officer but on terms
which was were limited to his annual before tax base salary, mobile phone allowance and fuel allowance under his former Written Contract of
Employment.
(d) The terms of this oral contract were eventually incorporated into a Written Consultancy Agreement, the terms of which was circulated between the Plaintiff and the Defendants but remained unsigned;
(e) The nature of this oral agreement upon which the consultancy agreement was prepared, was acknowledged by the Plaintiff in various email correspondence with the Defendant’s representatives.
(f) There was no agreement verbal or otherwise by the Defendants to the continuation of the terms of the Written Contract which had ceased following the Plaintiff’s resignation on 20 April 2015.
(g) Following a redundancy and reorganization of the First Defendants’ operations to manage operational costs, the Plaintiff was retained in that Consultancy as Acting Chief Executive Officer/Chief Investment Officer of the First Defendant on or around July 2015 to 2 May 2020 as part of the requirements with maintaining the LIM licence with Bank of Paua New Guinea .....
16. I observe from these pleadings the following. First, the plaintiff did not plead the fact, which is undisputed, that he voluntarily resigned from the 2013 Contract in 2015 to attend to studies. Secondly, the said fact was captured in the defendants’ defence. The defendants stated that the plaintiff had resigned in or about 20 April 2015 and that he was paid out all his final entitlements. I observe that the plaintiff does not deny these facts. There is also evidence adduced by the defendants that shows the payment of the plaintiff’s final entitlements after his resignation. Thirdly, I observe that the plaintiff’s pleading was premised or framed in a manner that:
17. I find the plaintiff’s said premise partially incorrect. I find, as a matter of fact, which is also not disputed, that the 2013 Contract was terminated when the plaintiff voluntarily resigned on or about 20 April 2015. I find, as a matter of fact, that the plaintiff had been paid all his entitlements that were due to him under the 2013 Contract when he resigned. I also find as a matter of fact that the plaintiff did not raise any issues after he was paid out his final entitlements under the 2013 Contract when he resigned. I also find as a matter of fact that there was no pleadings that assert that the 2013 Contract was extended, either by conduct of the parties or by implication, to reach its full 3-year term on 2 April 2016.
18. In summary, my first finding is that the 2013 Contract was terminated and did not extend after 20 April 2015. This then brings me to this next issue.
WHAT EMPLOYMENT AGREEMENT WAS THE PLAINTIFF EMPLOYED UNDER WHEN HE WAS RE-EMPLOYED BY THE FIRST DEFENDANT?
19. The next issue of liability I should consider and address is the type of employment agreement the plaintiff had with the first defendant when he was re-employed in June of 2015.
20. The plaintiff was re-employed on or about 5 June 2015. And it is not disputed that no new written contract, like the 2013 Contract, was ever executed between the parties then.
21. So, I ask myself these questions; (i) what were the terms and conditions of the oral employment contract that existed between the plaintiff and the first defendant when the plaintiff was re-employed on 5 June 2015 (Oral Agreement), (ii), how long did the Oral Agreement last?, (iii), where the terms and conditions of the Oral Agreement varied, and if so, what were these variations?, (iv), or if there was a new employment agreement that followed after the Oral Agreement, what were its terms and conditions?
22. Coming back to the issue under this sub-heading, I have considered the evidence filed by the parties. I also note the sworn oral testimonies of the witnesses whose evidence were also subjected to cross-examinations. Having considered them as a whole, I make the following observations:
(2) Where an employee under a contract of service made under Section 19(a) is permitted by an employer to continue his employment after the expiry of the period specified in the contract of service, the contract shall be deemed to be extended, on the same terms and conditions, for an unspecified period.
23. When I consider all that, I am minded to make this finding: - that the plaintiff resigned on 2 May 2020 whilst he was serving under the terms and conditions of the 2013 Contract which had been re-offered by the first defendant and accepted by the plaintiff, by the conduct of the parties from June of 2015 to the date when the plaintiff tendered his resignation in May of 2020. See case: PNG Forest Products Ltd v. Ossima Resources Ltd (2013) SC1275, Household Fire Insurance Co v Grant (1879) 3 Ex D 216, Nivani Limited v. Coconut Products Limited (2016) N65482 and NKW Holdings Ltd v. Paladin Solutions PNG Ltd (2020) N8339. That being the case, the plaintiff was subject to the same terms and conditions of the 2013 Contract.
24. So, in summary, given that the 2013 Contract had a term of 3 years, the same was assumed when the plaintiff was re-employed in 2015 by the first defendant, that is, where he served under the same terms and conditions of the 2013 Contract until after the 3rd year in 2018, which was when the 2013 Contract continued on for an unspecified period, in view of s.22(2) of the Employment Act 1978, until it was severed when the plaintiff tendered his resignation on 2 May 2020.
WAS THE 2013 CONTRACT REPUDIATED AND IF SO, WHETHER THE DEFENDANTS SHOULD BE HELD LIABLE FOR BREACH OF CONTRACT; WHAT ARE THE BREACHES?
25. I refer to the ASoC. The plaintiff’s main assertion for repudiating the contract is this. He claims that because the defendants (i) did not consult or notify him of their intention to demote or change his position as Acting Chief Executive Officer or CIO, to a Senior Analyst, and (ii) the fact that that was their intended action which they had implemented except that he refused to comply by not signing the new draft agreement that they had presented to him, that these had amounted to substantive breach of clause 3.2 of the 2013 Contract, thus he was faced with little or no choice but to resign which he did and to sue for breach of contract.
26. Clause 3.2 states:
The Employer hereby agrees to appoint and thereafter employ the Employee and the Employee agrees to join the employment of the Employer in the position specified in item 3 of the schedule upon the terms and conditions of this Contract. The appointment shall commence on the date as specified in item 4 of the schedule.
27. Item 3 of the Schedule of the 2013 Contract reads:
Position Chief Investment Manager
28. I refer to the defendants’ submissions on the matter. They deny the existence of the 2013 Contract and assert that there was an oral contract which was likened to a consultancy agreement which they said they eventually settled and offered to the plaintiff, but which was rejected when the plaintiff chose to resign in 2020.
29. I note that I have already made findings in regard to the 2013 Contract.
30. I uphold the submissions of the plaintiff that clause 3.2, which was a fundamental clause of the 2013 Contract, had been breached by the defendants. The parties were bound by the 2013 Contract and its terms and conditions. According to the contract, the plaintiff’s substantive position was Chief Investment Manager. The plaintiff, as revealed in the evidence and which is also not disputed, also held the position of Acting Chief Executive Officer of the first defendant from time to time, premised on the same terms and conditions of the 2013 Contract. The correct process, had the defendants wanted to offer the plaintiff the position Senior Analyst, was to terminate the 2013 Contract before making a fresh offer to the plaintiff, or they could have re-negotiated the terms and conditions of employment with the plaintiff on mutual terms. In this case, evidence adduced shows that the defendants had made unilateral decisions on the matter. Evidence of that or for one to make this presumption, is where the defendants, without appreciation or regard to the terms and conditions of the 2013 Contract, prepared and forwarded the new draft employment contract for the position of Senior Analyst to the plaintiff to sign. That, in my view, constituted one of the acts of repudiation of the 2013 Contract by the defendants; they no longer wished to be bound by the 2013 Contract but to move on to a new one; they also did not recognize the full terms and conditions of the 2013 Contract. See cases: Awesa v. PNG Power Ltd (2019) SC1848, Common Constructions Ltd v. TSC Contractors (PNG) Ltd (2017) N6681, Spar Shipping AS v. Grand China Logistics Holding (Group) Co. Ltd [2015] EWHC 718 (Comm), Eminence Property Developments Ltd v. Heaney [2010] EWCA Civ 1168 at [61]. The plaintiff reacted by regarding these acts as repudiation of the 2013 Contract where he later resigned and now sues for, amongst others, breach of the contract, namely, of clause 3.2.
31. I therefore find the first defendant liable for breach of contract.
32. Damages will be assessed in a separate hearing.
CLAIM OF ORAL AGREEMENT FOR THE FORD RANGER
33. I now turn my attention to this next issue of liability, that is, in regard to the plaintiff’s claim of a separate oral agreement that had purportedly existed at the material time. The plaintiff claims that in 2017, Kumul Consolidated Holdings Ltd made an offer to him twice for a position - Senior Portfolio Manager; it was first made as an offer and later as a counter-offer. He claims that upon discussing that with the defendants, they urged him to stay back by making various promises. The main promise made, according to the plaintiff, was to purchase him a brand new vehicle of his choice where he would get to keep or own the vehicle after continuous service with the first defendant for the next 3 years.
34. The defendants do not deny the existence of an oral agreement between the parties in regard to the purchase and use of the Ford Ranger vehicle by the plaintiff. However, the defendants deny knowledge of the offers that were allegedly made by Kumul Consolidated Holdings Ltd to the plaintiff at the material time. They deny the allegations raised on the matter by the plaintiff, to be or as the basis upon which the vehicle was purchased.
35. I make this observation. The evidence on the matter given by both parties on the matter appear credible. So, in summary, I find both the evidence of the plaintiff and the second defendant credible. What is the consequence then, or what does this mean? Let me begin this way. The plaintiff has the onus of proof. He has satisfied that onus and thus the burden shifts to the defendants. The defendants, on the other hand and premised on their evidence, have demonstrated their defence on merit on the subject matter. This means that the burden shall shift back to the plaintiff to provide other credible evidence for me to determine whether, on the balance of probabilities, the plaintiff has discharged the onus of proof.
36. I am unable to reach this conclusion, that is, to be satisfied that the Ford Ranger was purchased on the condition that the plaintiff may get to keep it at the end of the 3rd year of continuous service by the plaintiff with the first defendant without any regard to some form of payment arrangement that is put in place between the parties. The evidence appear to show, and I am convinced, that the Ford Ranger was purchased by the defendants as part and partial of his terms and conditions of employment.
37. My second conclusion or reason, which I give after having had a closer scrutiny of the 2013 Contract, is this. The plaintiff was bound by the full terms and conditions of the 2013 Contract at the material time. A copy of the 2013 Contract is attached as Annexure B to Exhibit P1. The terms of the oral agreement on the purchase of the vehicle, as submitted by the defendants, appears consistent with clause 8 of the 2013 Contract. Clause 8 reads:
8.0 MOTOR VEHICLE
8.1 The Employer may provide a motor vehicle of a suitable standard, which will be available to the Employee for use on full time basis and must be kept in a clean and tidy state, including, cleaning the interior and exterior at least weekly.
......
8.7 The employer may, subject to agreement with the employee, pay the employee a taxable transport allowance at an amount not exceeding the month stated in item 23 of the Schedule, in lieu of providing a motor vehicle and make such other equitable arrangements as acceptable to both parties in this contract to enable the employee to effectively perform his duties under this contract, including advances for the purpose of purchasing a motor vehicle.
[Underlining mine]
38. Pursuant to clause 8, the defendants were not obliged to but may provide a vehicle to the plaintiff, and if they do, then the parties were required to observe the various clauses therein.
39. The other relevant clause to consider together with clause 8, to appreciate the full extent of the agreement, in my view, is clause 38.0 which reads:
38.0 ENTIRE UNDERSTANDING
38.1 This Agreement contains the entire understanding and agreement between the parties as to the subject matter of this Contract.
38.2 All previous negotiations, understandings, representations, warranties (other than warranties set out in this Contract), memorandum or commitments in relation to, or in any way affecting, the subject matter of this Contract are merged in and superseded by this Contract and shall be of no force or effect whatsoever and no party shall be liable to any other party in respect of such matters.
38.3 No oral explanation or information provided by any party to another shall affect the meaning or interpretation of this Contract or constitute any collateral agreement warranty or understanding between the parties.
[Underlining mine]
40. Given my finding that the 2013 Contract was valid at the material time, that is, from June 2015 to 2 May 2020 when the plaintiff resigned, the parties were bound by its terms and conditions. And clause 38.3 expressly disallows any collateral oral agreements which include agreements such as the oral agreement that is relied upon by the plaintiff herein. Thus, I find that the oral agreement alleged herein, if existed at all, to be void and of no effect premised on clause 38.3.
41. Given these reasonings, the plaintiff’s claim under this oral agreement shall fail. The conclusion to be derived from this is that the Ford vehicle was provided to the plaintiff to use under or consistent with clause 8. The first defendant had exercised that clause and had provided a vehicle to the plaintiff to use for the duration of his services with it.
CLAIM FOR LOST OPPORTUNITIES AND ORS
42. This head of damage plus others, including the 2 percent share claim, may be assessed subject to an assessment hearing. The plaintiff will have to convince the assessment Court that he may seek these relief, and if they are proven, how much should be awarded under each head of damages.
SUMMARY
43. In summary and premised on my findings on breach of contract, the matter will now proceed to hearing on assessment of damages.
44. I will list the matter down for directions hearing in the new year. I will also urge parties to consider the option to settle out of court on their own terms or through court ordered mediation. I will hear from the parties on this when the matter next returns.
COST
45. I will order cost of the proceedings up to the hearing of and conclusion of hearing on liability, including the final orders to be obtained herein, to follow the event on a party/party basis to be taxed if not agreed.
ORDERS OF THE COURT
46. I make the following orders:
The Court orders accordingly
________________________________________________________________
Lawyers for the Plaintiff: Kopunye Lawyers
Lawyers for the First, Second and Defendants: Leahy Lewin Lowing Sullivan
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