SC2083

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 147 OF 2016

BETWEEN:
PNG POWER LIMITED
Applicant

V

ANTHONY YAKUPA
Respondent

Waigani: Kandakasi DCJ, Anis J, Berrigan J
2020: 24th November
2021: 31st March

APPEAL – Appeal against findings of unlawful termination – type of contract - whether contractual terms breached – whether plaintiff not afforded right to be heard before his termination – appeal to employer’s appeal panel – whether appeal panel duly considered or gave sufficient weight to the evidence that had been presented – consideration of  - all process under contract of employment followed – no breach of contract  - appeal allowed with costs and National Court proceedings dismissed as having no merit.

Cases Cited:

Alyeen Bure v. Robert Kapo (2005) N2902
Jimmy Malai v. Papua New Guinea Teachers Association [1992] PNGLR 568
New Britain Palm Oil Limited v. Vitus Sukuramu (2008) SC946
Robert Kapo v. Ayleen Bure (2010) SC1162
Vitus Sukuramu v New Britain Palm Oil Limited and Others (2007) N3124
Vagi v. National Capital District Commission [2004] N2280
Ereman Ragi & Ors -v- Joseph Maingu (1994) SC459

Counsel:

Ms M Tusais, for the Appellant
Ms D Mewerimbe, for the Respondent

31st March, 2021

1.	BY THE COURT:	 This is an appeal against a decision of a trial judge made on 23 September 2016.  In that decision, the trial judge found the appellant liable of unlawful termination of the respondent.  

BRIEF BACKGROUND

2.	The respondent’s claim in the National Court (trial Court) was for unlawful termination.  He is a former employee of the appellant.  His employment at the material time was based on various written contracts.  His contract was last renewed and signed on 1 January 2007 for a period of 3 years (employment contract).  On 21 April 2008, the appellant terminated the respondent’s employment contract.  His termination was based on allegations that had been laid against him from the period 2004 to 2005.  At that time, the respondent worked as Power Superintendent and he was in charge of an area called the Pauanda Power Station, which is a mini-hydro power station situated in the Western Highlands Province.  Following completion of investigations on 5 February 2008, the appellant served the respondent with a Notice of Allegations (Notice).  The allegations against the respondent were that, between 2004 and 2005, he used the appellant’s local purchase orders or LPOs to obtain monies in excess of K79,000 and applied them for his personal use, which was to renovate his private home in Tambul in Western Highlands Province.  The Notice required a response from the respondent within 7 days.

3.	On 15 February 2008, the respondent provided his response.  He denied the allegations in the Notice.  In regard to the main allegation of misuse of company LPOs, he said he had used K73,409.96 in hard cash, from his own savings, to renovate his family home in Tambul in Western Highlands Province during the same period.  He said it was not from monies derived from the company LPOs as alleged.  He also claimed that the whole investigation was a conspiracy that had been conducted against him by persons with vested interests for their own gain.

4.	After considering his response, the appellant on 21 April 2008 terminated the respondent.  In the letter of termination, the appellant, amongst others, gave the respondent 7 days within which to appeal to its Chief Executive Officer.  The termination letter was served on 13 May 2008.  The respondent lodged his appeal by way of a letter on the same date.  On 18 August 2008, the appellant’s Acting Chief Executive Officer Lawrence M Solomon (CEO or Mr Solomon) provided his response to the appeal.  He upheld the decision of the company in terminating the respondent.  The respondent was aggrieved and filed proceeding WS 1440 of 2008. On 23 September 2016, the trial Court found that the appellant was unlawfully terminated.

5.	The present appeal stems from there.

GROUNDS OF APPEAL

6.	The appellant has pleaded 3 grounds of appeal (in its Supplementary Notice of Appeal, at pages 2 and 3 of the Appeal Book, Vo. 1).  He firstly claims the trial judge erred in mixed fact and law because, contrary to his findings, the appellant did not breach the terms of the employment contract at all or to an extent where it’s action or conduct may be regarded as unlawful.  Secondly, the appellant also claims the trial judge erred in mixed fact and law because, contrary to his findings that natural justice was not accorded, the respondent had been provided with an opportunity to respond to the charges and to lodge his appeal, pursuant to terms and conditions of the employment contract.  The third ground of appeal is related to or is a repeat of grounds 1 and 2.

ISSUES

7.	The main issue in our view is this, whether the appellant had observed the requirements under the employment contract for termination, and in particular, whether the employment contract provided for a right to be heard, and if so, whether it was afforded to the respondent before he was terminated.  The next related issue is this, whether the trial Court was permitted to review the decision of an internal appeal process that had been conducted by the appellant in a case where the cause of action was for unlawful or wrongful termination.

COMMON GROUND

8.	It was not disputed at the trial Court that the appellant’s disciplinary policies (company policy) constituted part and parcel of the employment contract.  The employment contract and company policy were admitted as evidence at the trial Court (see pages 109 and 117 of the Appeal Book Vol. 2).

9.	The employment contract states that the parties are bound by it.  It states perhaps not expressly but impliedly under clause 8 that, the company policy shall apply for alleged serious disciplinary offences.  That appeared to be the basis upon which the appellant had proceeded to deal with the respondent’s case, that is, by applying its disciplinary process stipulated under its company policy.  No issue was raised in that regard before the trial Court.

10.	The parties were also at common ground regarding the issuance of the Notice, the respondent’s response to the Notice within 7 days, the termination letter that was issued afterwards on 21 April 2008, and the appeal by the respondent to the CEO Mr Solomon on 13 May 2008. 

MAIN CHALLENGE

11.	The main challenges argued before the trial Court by the respondent concern (i) the respondent’s right to be heard and whether he was afforded that right, and (ii), how the CEO had conducted the appeal process, that is, whether proper or sufficient weight was given to the respondent’s appeal documents or evidence that were put before him.  The respondent claimed he was not afforded a right to be heard on his appeal, and secondly that, Mr Solomon did not properly consider his evidence or supporting documents that he had provided in his appeal.

12.	The appellant on the other hand, submitted before the trial Court that the parties were bound by the employment contract, and based on that, the processes for termination had been followed before the respondent was terminated, and as such, the claim was baseless.  The appellant also submitted that the trial judge took into account irrelevant matters that affected his decision; matters that had no relevance or significance to the issues at hand.

MATERIAL PLEADINGS

13.	When we consider the ‘contract’ and its terms as pleaded at paragraph 6 in the statement of claim, we can see from the evidence tendered that it was subsequently changed whereby the parties had entered into a new contract which was the employment contract.  And the employment contract was the one (and not the former contract as pleaded) that the parties had adduced as evidence at the trial Court.  (i.e., see page 626 of Vol. 4 of the Appeal Book, and at page 109 of Vol 2 of the Appeal Book).

14.	The material terms of the employment contract read, in relevant parts:

“PNG Power Ltd wishes to employ Mr. Anthony Yakupa as Team Leader – Condition Monitoring & Logistics and he has agreed to serve the PNG Power Ltd as an employee on a contract of employment.

The Parties are mutually bound by the terms and conditions for the contract as recorded hereunder.
……

1.	Mr. Yakupa will adhere to the Board and Company Strategy and abide by Company policies, regulations, guidelines and operating procedures and fully understands that failure to comply may lead to dismissal.
……

8.	Unless for a serious disciplinary matter (as outlined in the Company policy), PNG Power Ltd will provide one month’s written notice should PNG Power wish to terminate the contract.  This notice may be served or paid out as mutually agreed.
9.	Similarly, Mr. Yakupa will provide one month’s written notice of resignation.  If shorter notice is provided, remuneration will be deducted accordingly.
……
11.	In the event of any conflict of interpretation as between the Contract and the Terms and Conditions for the General Body of Employees, then the Contract shall prevail.
12.	Except where the Contract is silent, the Contract overrides the conditions outlined in the previous contract.”

15.	Also relevant for this purpose is the pleading, and we quote from paragraphs 7, 8 and 9 of the statement of claim which reads:

 “7.	The Plaintiff was terminated after accusing him of applying to his own use or purposes, a local Purchase Order (LPO) belonging to the Defendant worth K56,317.00 to buy materials.  It was alleged that the Plaintiff ordered for himself to build his own house in his village, a solar hot water heater and two (2) water tanks using the Local Purchase Order resulting in his termination on the 21st of April 2008.

8.	The Plaintiff had appealed his suspension to the Chief Executive Officer of the Defendant to review the suspension but the Chief Executive Officer affirmed the Plaintiff’s termination on the 13th of May, 2008.

9.	The termination of the Plaintiff was therefore not done in accordance with the terms of the Contract referred to at paragraph 6 of the Statement of Claim as there was no expressed terms of contract relating to the grounds of either the suspension or termination of the Plaintiff and further that the Chief Executive Officer did not properly consider documentations the Plaintiff presented to prove his innocence.”

16.	We observe that the pleadings do not match the evidence, namely, the employment contract and the arguments that had been presented before the trial Court.  The pleaded contract, as stated, is different from the employment contract.  It was not tendered into evidence before the trial Court.  So, the trial Court only had one contract before it for consideration, which was the employment contract.  But despite all that, no issue was taken in that regard by the parties at the trial.  As such, we can only assume that the parties had, by their conduct, permitted arguments and matters that were not pleaded into or at trial, and had proceeded on that basis, that is, to regard the employment contract as valid at the material time of the respondent’s termination.  We also note that no issue concerning the pleadings was raised by the appellant as a ground of appeal herein, so this is not before us for consideration.  But it was nevertheless a significant change made to the pleadings during the trial thus, in our view, requires mentioning and perhaps a remark or two herein.  That said, and in any event, we note that both contracts require the application of the company policy and its processes for serious or disciplinary actions against its employees.

CONSIDERATION AND DECISION

17.	We deal with the first argument.  The obvious question to ask is this.  Where in the company policy does it state that the respondent or an aggrieved employee who is terminated and who has appealed, must be physically present or shall appear before the appeal board, committee, or CEO, to present his or her case?

18.	We turn to the company policy of the appellant.  Having considered it, we make these observations.  Firstly, there are no provisions therein for actual participation at appeal hearings by employees that are charged with serious or criminal offences.  The relevant provisions of the policy are contained at section 2, and in particular, section 2.2 (see pages 127 to 129 of Vol. 2 of the Appeal Book).  The process in summary is as follows.  A supervising/superior officer may charge an employee accused of committing a serious offence.  That is done by issuing a Notice of Charge.  The employee is then given 7 days to respond.  At page 11 of the policy under section 2.2, it states:

 “JUDGING THE OFFENCE:

After the seven (7) days have lapsed all documents are to be considered by the superior officer to the officer laying the charge.

This officer is to judge whether the accused is guilty of the Charged.  The appropriate part of Section B of the Disciplinary Report form should be completed.”

19.	After the superior officer makes his final decision, the employee concerned may lodge an appeal to the general manager or the CEO of the company within 7 days.  At page 12 of the policy under section 2.2 (page 128, Vol. 2 of the Appeal Book), it reads in part:

“APPEAL:

Any appeal must be made in writing by the accused within seven (7) days of his being handed the notice punishment.”  

20.	In this case, the respondent had exercised his right of appeal as summarised above.  And the letter by the CEO or Mr Solomon which was attached in evidence (see page 314, Vol. 2 of the Appeal Book) reads in part: 

“After a careful consideration and review of your appeal against the decision of the General Manager Operations to terminate your employment together with all other relevant evidence pertaining to your case, I made a decision to uphold the decision to terminate your employment with PNG Power Limited.”

21.	We observe that the above process was not set out and considered by the trial judge before arriving at his decision.  We also observe that the trial judge’s ruling that the respondent had a right to be heard, was not expressly explained with reference to a relevant section(s) of the company policy.  It appears with respect that, his Honour merely assumed that the respondent had a right to present his appeal or be physically present to argue his appeal.  As stated, there are no provisions in the company policy that permits physical appearance by an employee to present his or her case on appeal.  The policy provides that an employee is permitted to appeal by submitting his or her appeal with supporting documentations, for consideration by the appellant.  And as the contract was written and express, it was not open to the trial Court to look elsewhere except on the terms and conditions of the employment contract, to make a finding on a claim for unlawful termination.  A better illustrative case, in our view, is the case of Alyeen Bure v. Robert Kapo (2005) N2902.  The plaintiff worked with a mining company called Placer PNG Ltd.  He was terminated for cause.  His employment contract, the trial judge found, included the company’s manual which provided the process for disciplinary charge or offences.  The disciplinary process in the manual had provision for a right to present one’s case; for one to appear at the appeal hearing and make submissions; it provided an employee the right to appeal against the decision made by the supervisor; it provided an employee the right to appeal after that to an internal panel, and the right to appeal further to the management level of the responsible department of the company; and it provided an employee the right to appear at the appeal hearings either in person or through a representative, and the right to adduce evidence or witnesses before an appeal panel.  These were all contained in the company manual which was part of the plaintiff’s contract of employment.  The plaintiff was not afforded any of those processes as provided for in the manual.  Injia DCJ, as he then was, found that the employment contract provided for a right to be heard.  His Honour stated and we quote in part:

“Written Contracts of employment in private contracts ordinarily do not provide for a disciplinary process which governs dismissal on disciplinary grounds, such as those prescribed by statutes governing public employment found in public employment contracts. It is indeed rare to see extensive stringent disciplinary procedure which are expressly stated by private companies in written contracts or adopted or implied from external sources. However in the case of PJV, for some reason to do with public policy on employment of officers, PJV decided to include those disciplinary provisions in the Manual. The second sentence in Clause 14 of the Contract expressly refers to the “Company Policies”. The Respondent’s endorsement also expressly refers to the “Company’s Policies and Procedures”. I take them to mean reference to the Company’s Manual of Personnel Policies and Procedures. The Manual defines disciplinary offences and prescribe the disciplinary procedures to be followed. They require the employer to carry out full and proper investigations into the alleged offence and give the employee an opportunity to be heard before a decision on dismissal is made. It is inaccurate to describe this procedure as incorporating traditional principles of common law on natural justice, as adopted under S.59 of the Constitution and applied in many cases dealing with public employment contracts. But it is accurate to say the disciplinary process in Clause 5.6 – 5.8 are designed to ensure fairness in the process of dealing with disciplinary offences. In my view, they do confer a right on the employee to be heard on the charge before a decision is made by PJV. This right is conferred by the written Contract and not by the common law. The question is whether the Contract adopted the disciplinary procedure in the Manual.”

22.	On point, the trial judge found that the plaintiff had not been afforded the right to be heard under the clauses of the company manual for the disciplinary charge that the plaintiff had been accused of.  His Honour’s decision was appealed to the Supreme Court.  This Court in Robert Kapo v. Ayleen Bure (2010) SC1162 refused the appeal and confirmed the trial Court’s decision.

23.	So, coming back to the present matter, we ask ourselves this.  Did the employment contract contain provisions that gave the respondent a right to be heard, and if so, was it afforded to him?  The answer to that in our considered view is this, “yes, it did, and the respondent had been afforded that right or opportunity as provided for under his employment contract.”  In accordance with the relevant provisions in the company policy, the respondent had been given the right to respond to the allegations in the Notice, and he was also given the opportunity to, and he did appeal to the CEO of the appellant who then considered and made a decision on the appeal.  The company policy did not contain provisions that shall require the respondent to appear in person before the CEO or General Manager of the appellant to present his case as in the Ayleen Bure case, where the company manual did provide for such physical appearances or representation.  The processes in the present case were exhausted before the respondent’s employment was regarded as terminated.  It therefore meant that no error was committed by the appellant when it terminated the respondent.  The employment contract was not wrongfully or unlawfully terminated.  The trial judge in our respectful view erred when he did not make these findings and conclusions.

24.	The final point we wish to make concerns the argument on the right to be heard or observance of natural justice.  We begin with these questions.  Was the claim for observance of natural justice pleaded?  If it had not been pleaded, should it not have been raised in the first place before the trial Court?  This Court had, amongst others, dealt with a similar issue in New Britain Palm Oil Limited v. Vitus Sukuramu (2008) SC946.  It stated, and we quote at paragraphs 40 and 41:

“40.	The Respondent's statement of claim asserts at paragraph 21 that "Plaintiff was denied of a fair hearing". That is the only statement in the Statement of Claim which one could say in any way put in issue the right to be heard. No mention is made in the statement of claim of a right to be heard pursuant to the provisions of the Company regulations. We agree that the alleged right was not pleaded.
41.	Pleadings play an important part in all matters going before the Court. The Supreme Court said in Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370 that pleadings and particulars have the important function of doing the following:
 ‘1.  They furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it;
2. They define the issues for decision in the litigation and, thereby, enable the relevance and admissibility of evidence to be determined at the trial; and
3.  They give a defendant an understanding of a plaintiff's claim in aid of the defendant’s right to make a payment into court. See Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 at 664.’”

25.	Looking at the statement of claim, the closest, if not the furthest, that we could get to the allegation of want of natural justice, is the second part of paragraph 9 where it states, “and further that the Chief Executive Officer did not properly consider documentations the Plaintiff presented to prove his innocence.”  With respect, that to us is not a pleading of a right to be heard or natural justice.  As we will further explain below, it constitutes a complaint that insufficient regard was given to the documentations that had been provided in the appeal to the CEO.  So, without this pleading, the matter or the issue could have been discarded or dismissed for this reason alone, that is, want of pleading natural justice.  Instead, the trial Judge dealt with it as if it had been pleaded in the statement of claim.

26.	Before the trial Court, the respondent also argued as his second reason that Mr Solomon did not give due regard to the evidence that he had provided.  He pleads that at paragraph 9 of the statement of claim.  This argument is misconceived and could not have been a relevant argument before the trial Court for the issues that were at hand.  This was not a judicial review proceeding, but rather, a proceeding that was commenced for unlawful or wrongful termination, which warranted consideration of the processes that were required under the concerned contract relating to termination, and which warranted determination of whether the termination was lawful or not.  That is, whether the steps that were required to be taken before termination may be effected under the employment contract, had been observed by the employer.  Based on the cause of action and pleadings, with the greatest of respect, it was not the trial Court’s role to consider whether sufficient or insufficient weight was given before termination was effected, nor consider factors outside the terms of the employment contract.  The trial Court only had to consider whether all the steps were followed before termination was effected.  If for example step 3 out of a total of 5 steps under the employment contract had not been complied with before the respondent was terminated, that would have warranted the trial Court to conclude that the respondent was unlawful terminated.  However, that was not what transpired before the trial Court.  The trial judge, with respect, went beyond that and considered matters that were irrelevant or outside the terms and conditions of the employment contract.  The trial judge considered the right to natural justice which was not pleaded.  Additionally, the trial judge did not consider the fact that the respondent had been afforded all his rights including his right of appeal, in accordance with the terms and conditions of his employment contract.  

27.	Our considered and respectful view therefore is that the learned trial judge erred when he proceeded to consider the right to natural justice when it was not properly pleaded and was not before him for consideration.  The learned trial judge also fell into error when he found that the respondent was not afforded natural justice when quite to the contrary, the respondent was given every opportunity by the appellant to be heard as was required under the employment contract.  The learned trial judge also erred when he treated the hearing like a judicial review proceeding, that is, when he considered whether the appeal body which was the CEO, had properly determined the respondent’s appeal; whether the CEO had given sufficient weight to the respondent’s appeal documents.  Clearly, that was something which the trial Court did not have jurisdiction to determine.  This was a case of a claim for unlawful termination in a private contract setting.  See cases:  Jimmy Malai v. Papua New Guinea Teachers Association [1992] PNGLR 568, New Britain Palm Oil Limited v. Vitus Sukuramu (supra); Ereman Ragi & Ors v.  Joseph Maingu (1994) SC459.  

28.	The respondent had referred to 2 National Court decisions, namely, Vitus Sukuramu v New Britain Palm Oil Limited and Others (2007) N3124 and Vagi v. National Capital District Commission [2004] N2280, to support his argument on natural justice.  We note that the National Court in Vitus Sukuramu case had attempted to, amongst others, extend the right to be heard or natural justice beyond the principles of common law so that it may apply to private employment contracts.  The said decision was over-ruled by this Court in the New Britain Palm Oil Limited v. Vitus Sukuramu (supra).  On point, the Supreme Court confirmed that the existing common law remained unchanged, which is that an employer has the right to terminate at any time, following the procedures set out in the contract or statute.  Regarding the case of Vagi v. National Capital District Commission (supra), we do not see how that would have assisted the respondent’s case.  It seems that the then counsel for the respondent did not properly address the Court on what the National Court had actually stated in the case.  Counsel did not make the clear distinction that exists when it comes to termination of a public and a private employment contract, as was well explained by Kandakasi J, as he then was, in that case.  The full quote of what his Honour stated, (only a portion of it was relied upon by the respondent’s counsel before the trial Court), is this:

 “At common law an employer is entitled to terminate an employee with or without reason: see Steamships Trading Co. Ltd v. Joel & Ors [1991] PNGLR 133 at 141.  However, it has been held in cases were the reason for dismissal affects the reputation of the employee concerned, he must be given the opportunity to be heard and defend himself before being terminated.  This principle applies in our country in nearly all public sector employment and to the private sector only by virtue of agreement of the parties to a contract of employment.  This is the effect of a number of authorities in our country such as the Supreme Court judgement in Jimmy Malai v. Papua New Guinea Teachers Association [1992] PNGLR 568.  (Underlining ours).

29.	The Vagi v. National Capital District Commission (supra) case did not depart from the common law position as settled by numerous case authorities including Jimmy Malai v. Papua New Guinea Teachers Association (supra) and New Britain Palm Oil Limited v. Vitus Sukuramu (supra).  

30.	The second reason we say the argument (i.e., that the CEO did not give due regard to what had been presented in the appeal) should fail is this.  The pleading at paragraph 9 of the statement of claim is misconceived and contradictory.  The respondent firstly alleges that his employment contract did not have an express provision that contains the grounds for either suspension or termination.  The said pleading is incorrect as both contracts (i.e., the earlier contract as pleaded at paragraph 6(i) of the statement of claim and clause 1 of the employment contract) refer to the appellant’s company policy which contains detailed provisions on the grounds for suspension and termination.  The company policy applied to both contracts.  Despite making the said claim in the pleadings, in the second part of paragraph 9 of the statement of claim, the respondent tries to rely on the company policy to argue that the CEO did not properly consider the evidence that he had presented to prove his innocence.  

31.	All these, in our view, go to show that the appeal is with merit and it must be upheld with the substantive action in the National Court dismissed as baseless or without merit.  

SUMMARY

32.	We would uphold the appeal and grant the orders as sought.  Costs of the appeal and the National Court proceeding shall follow the event.

REMARK

33.	Before turning to the formal orders we would like to comment on one practice aspect. This concerns parties failing to file their respective submissions within times set by directions orders issued by the Directions Judge of the Supreme Court when a matter is allocated a hearing date.

34.	We observe that in such a case, it is often left to the discretion of the Supreme Court that is sitting to hear a matter.  In some cases, the Court will reject outright submissions that are belatedly filed.  In other cases, the Supreme Court will allow a party to proceed with a word of caution to the responsible party or his or her counsel to ensure in future to file submissions within time, or the Court may regard the matter as not ready and have it referred back to the Directions Judge for relisting.  Often, a party that is anxious to have his or her case heard and disposed of promptly will comply readily with the directions aimed at achieving that.  On the other hand, a party desirous of delaying the proceedings may deliberately fail to comply with such directions, knowing that, that might likely lead to an adjournment and hence delay the proceeding.

35.	Whatever approach the Full Court takes on the issue, there can be no doubt that the late filing of a parties’ submission could result in a wastage of the Courts’ time and resources.  Also, of significant considerations are that (i), the party that is affected, because of such failure, is disadvantaged at the actual hearing and (ii), the Court will not be properly assisted prior to the hearing by having access to both sets of submissions. 

36.	Whilst the Supreme Court has the power and discretion to control proceedings that are before it on its own terms, we suggest it will be much better if there is a set process or direction issued by the Supreme Court or the Judges through the relevant rules or a practice direction issued by the Registrar in consultation with the Chief Justice, on how best to deal with or address such situations.  

ORDERS OF THE COURT

37.	We make the following orders:

1.	The appeal is upheld.

2.	The whole of the Orders and Judgement of the National Court made on 23 September 2016 in WS 1440 of 2008 is quashed.

3.	The proceedings under reference WS 1440 of 2008 is dismissed in its entirety.

4.	The respondent shall pay the appellant’s costs of the appeal and of the National Court proceedings, on a party/party basis which may be taxed if not agreed.

Dentons PNG: Lawyers for the Appellant
Jerry Kiwai Lawyers: Lawyers for the Respondent