Unreported Supreme Court Decisions
SC439
PAPUA NEW GUINEA
[SUPREME COURT OF JUSTICE]
SCA 106 OF 1992
BETWEEN:
CENTRAL PROVINCIAL GOVERNMENT - APPELLANT
AND
PATRICK ALFRED VIRO HAINO - RESPONDENT
Waigani
Hinchliffe Sheehan Andrew JJ
24-25 May 1993
APPEAL - Contract of employment upheld in National Court - Claim that position should be overturned for failure of trial Justice to create new underlying law.
Counsel
Mr G Powell for the Appellant
Mr K Kua for the Respondent
25 May 1993
HINCHLIFFE SHEEHAN ANDREW JJ:  The Respondent Mr Patrick Haino was employed by the Central Provincial Government as a Director of it’s Provincial Secretariat and took up his duties on the 12 August 1988.  In May of 1989 because it was dissatisfied with his performance in this post the Provincial Government saw fit to dismiss him.
The Appellant than sued for damages in terms of a contract of employment dated the 3rd of January 1989, claiming severence pay of six months salary and allowances.  This amounted to some K69,000.  In the alternative he claimed damages for wrongfull dismissal and hereto the damages claimed were for the same figure, K69,000.
The Central Provincial Government denied the validity of the employment contract dated the 3rd of January, 1989.  The defence advanced by the Respondent was that the Plaintiff’s terms of employment had been fixed upon his appointment by the Central Provincial Government Council on the 31st of August, 1988.’  That appointment stated that he was employed on a straight contract basis for a period of four years and that would be no fringe benefits.  He was to be provided with a car but only for the purposes of his duties and not for his personal use.
The defence contended that the contract asserted by the Plaintiff had been procured fraudulently.  The Plaintiff had “conspired or contrived to obtain salary entitlements and benefits in excess of those which were authorised’.
At trial before the National Court this defence failed.  The learned trial judge found no fraud.  He was satisfied that the Plaintiff, through prior experience was aware of the need for getting a contract spelt out in concrete terms.  The Court found that the appointment resolved by the Provincial Executive on the 31st of August, 1989 did not of itself constitute a finalised contract.  The learned trial Judge found nothing sinister in the Plaintiff not being satisfied with the decision of the Provincial Executive to employ on the terms nominated or with his putting forward his own offer in reply.
The Court went on to say that the Plaintiff, was prepared to negotiate his terms on a basis of take it or leave it.  The Provincial Executive Council, which included the Premier and many other members of the Council, did not have to accept his counter offer.  They decided to accept it and that was all there was to it.
“There was therefore a properly drawn contract and he was employed under that contract and therefore he must be given the entitlements under that contract.”
Dissatisfied with the National Court decision the Defendant has appealed to this Court.
The first ground of appeal was that the learned trial Judge was in error in failing to find fraud on the part of the Respondent.
In fact this ground was not pursued.  Counsel for the Appellant having made several changes of position on whether he would or would not argue this ground, the question was put to him to decide.  When his answer remained equivocal, the ground was dismissed.
The second ground relates to an issue not raised at the trial, namely, that in breach of his constitutional duty as a National Court Judge, the learned trial Judge failed to develop the underlying law by stating a new principle to cover the hiatus in law left by his decision, that there was no fraud on the part of the Plaintiff.
The basis of this ground is perhaps best stated in the words of Counsel for the Appellant.  In his written submissions he says:
“The essence of this appeal is a contention that the learned trial Judge erred in failing to develop and apply a principle of underlying law when considering the right of the Respondent to recover damages following the termination of his contract of employment.  It is submitted that a rule of underlying law is appropriate to oblige a public officer to discharge his duties to his employer with utmost good faith when he advises on matters affecting his own entitlements and renumeration.  In the absence of any principle of customary law or the adopted Common Law of England it should be said that such a public officer in such circumstances has a duty similar to that of a fiduciary relationship (eg as between a director and his Company or between a solicitor and his client) and obligations that apply to contracts to which the principles of uberrimae fidei apply.”
This being a ground of appeal on an issue not raised by pleadings at the trial,  this Court determined that leave to pursue this ground should be sought.  Leave was sought and granted despite well reasoned opposition from the Respondent.
It was the Appellants case that the learned trial Judge was “obliged” to find that a final contract of employment existed by the end of August 1988.  That was the time when the Provincial Government announced to the Respondent his terms of employment.  It was argued that once employment was accepted in those terms in (and the Appellant contended that they were because the Respondent worked and continued to work under those terms then, any wish or attempt by the Respondent to vary those terms could only be done under a duty of total disclosure.  That is he had to show uberrimae fidei by the Respondent the utmost good faith - required of a public servant holding high office as an of advise to a Government.
Counsel for the Appellant argued that the finding of lack of fraud left the status and duties of senior public servants undefined.  Whether or not the defence should have raised the issue (and by this argument it couldn’t have because it didn’t know what the Court’s decision would be) Schedule 2.3 of the Constitution lays the duty on the Court to develop necessary underlying law.  Counsel said:
“In the event that the Court cannot ascertain an appropriate and applicable rule of customary law or the adopted common law it is under a positive duty to develop a principal of underlying law.”
The Court did not call on the Respondent.
It must be plainly stated.  There is no merit at all in this appeal.
The Courts are well aware of the Constitutional duty to develop the underlying law and the need to do so where there opportunity arises and the need is apparent.  But that duty is only to be exercised in situations readily perceived as being governed by no custom or principle of law.
As was pointed out by the Supreme court SCR 1 of 1978 and SCR 4 of 1980.  There must first be a gap that requires attention and there must also be evidence or argument of it advanced before any new principle is introduced.  To proceed to do so in the absence of such evidence or argument would be to proceed in error.
Here there is no gap no absence of principle of customary law.  The very submission by counsel for the Appellant shows that, when he quotes the principles of contract law relating to Representation, misrepresentation and the duty of disclosure in situations requiring utmost good faith.  The Common law decisions on those issues are very clear and they make it equally clear that in the case of the duty of disclosure the classes of contracts requiring utmost good faith will never be closed; will always depend on the particular case.
The learned trial Judge arrived at a conclusion on the facts that in our view he was well able to come to.  He found that the employment/dismissal of the Plaintiff was governed by the law of contract.  There was no fraud as alleged.  There was no need for him to address any hiatus in the law because there was none.
It was not argued before him nor was he obliged to consider whether the public servant before him should be declared to be in a special duty position vis-a-vis his employer.  To raise this argument as to underlying law now can only be seen as an attempt to recover from failure to adequately present the defence case in the National Court.
But there is a simpler, more direct reason for dismissing this appeal.  The thesis of the Appellant in that the Respondent failed to disclose the consequences of his terms for a new contract or that it included terms not initially offered to him.  Even if it were conceded that the Respondent - was seeking a new contract; was in a position requiring complete disclosure, the record shows that before the contract of the 3 January, 1989 was executed by the Provincial Executive Council it had the submission of the Respondent that the Secretariat Budget totalled K167,000 before it, covering  “items 1-10” and notice that “All items are budgeted for including Directors Terms and Conditions”.
Counsel for the Appellant did not know what items 1 to 10 were.  Nor could he deny that “items 1-10” did not provide the full disclosure that the Appellant complained it should have had.
No issue was taken in the National Court on the details or the quantum of the Respondents claim though any reading of the contract raises substantial issues of dispute.  That was not pursued here either and this Court sees no reason to raise dispute where the Appellant sees none.
The judgment of the National Court must stand.  The appeal is dismissed.
Lawyer of the Appellant: Central Provincial Government
Lawyer for the Respondent: Carter Newell