Naguwean v The State [1992] PNGLR 367 (15 May 1992)

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CONTRACT - Employment - Employee never having embarked upon the work - Employer's action in re-appointing giving rise to claim for breach.

DAMAGES - Normal damages - Ascertainment when contract breached in futuro - Working life not proper basis - Assessment related to period of probation when employer bound to remunerate employee - Special damages need to strictly proved - In absence of clear agreement, no entitlement in plaintiff to extraordinary amount for relatively common place work done at own instigation without reference to his principal - Award for distress, frustration and or disappointment.

PRACTICE AND PROCEDURE - Interrogatories - Duty of the Court to determine whether answers sufficient - Just cause in seeking to strike defence out must be shown.

In early April 1989, the plaintiff saw an advertisement for the position of Principal Clerk of Committees, National Parliament. He applied in writing on 4 April 1989 and, after two interviews, was advised by letter on 8 September 1989 that he was successful and asked to confirm acceptance and a date of commencement in early 1990. On 24 September, the plaintiff wrote seeking details of the terms and conditions of employment before formally accepting the position. A reply was sent by the Clerk of Parliament on 21 November 1989. The letter concluded with the expectation that the plaintiff would commence late in January 1990.

As a result of the plaintiff's wish to obtain better terms and conditions, he delayed taking up the appointment, and the position was filled by someone else. He issued a writ against the State claiming damages for breach of contract.

A defence was filed by the State, admitting the offer of employment, but denying an agreement, based on the refusal of the plaintiff to embark on the employment. That defence was subsequently struck out following the failure of the defendant to satisfactorily answer interrogatories administered by the plaintiff. The defendant did not appeal from that order but defended the action on the question of proper assessment for ordinary and claimed special damages.

1. A contract for personal services is not specifically enforceable at the suit of either party; relief lies in a claim for damages.

2. Where the terms of employment include a probationary period, the employment could be annulled. This, therefore, provides a basis for calculation of appropriate damages related to the probationary period.

3. The plaintiff's entitlement is the difference between his salary in his present employment and that which he would have got in his new employment, had he taken it up, but only for the probationary period.

4. In a breach of contract for personal services, a sum might be allowed for frustration, distress and/or disappointment.

BROWN J: The plaintiff, who is a library officer at the University of Papua New Guinea, claims an assessment of damages for breach of an alleged contract of employment. In a usual case, damages will be the equivalent of wages for the period of proper notice, but here the employer, in fact, had filled the position sought by the plaintiff before he had taken up his appointment. He had applied for a position as Principal Clerk of Committees, National Parliament. He obtained interlocutory judgment in circumstances which require comment, but, nevertheless, the Solicitor General, Mr Baker, conceded liability and argued the claim on a proper assessment of damages.

The defendant sought and obtained an order for interrogatories. These interrogatories were answered on 26 August 1991. On 11 October 1991 the plaintiff obtained orders in terms of its notice of motion requiring further answer to various interrogatories which the State had originally answered by the phrase "not necessary to answer".

It should be stated that a defence had been filed on 8 May 1991. In the defence, the defendant traversed the paragraphs of the statement of claim by way of general denial (as permitted by the Rules). The defendant specifically admitted, however, at para 3, "that an offer or invitation to treat was made to the plaintiff on the 8 September 1989 for the position of a Principal Clerk of Committees in the Parliamentary Services of the National Parliament". The defendant, having denied the plaintiff's allegation of an agreement in the statement of claim, further pleaded non-acceptance of the said offer by the plaintiff; the defendant withdrew the offer on 10 January 1991.

The plaintiff joined issue with the defendant by its reply filed on 24 May 1992. Thereupon the pleadings closed. Strictly, there is no need to file a reply in these circumstances, for joinder of issue is to be implied, so that by the Rules the plaintiff, without anything further, is deemed to have denied the allegation of fact made by the defendant where it alleges non-acceptance of the offer.

Later on, the defendant failed to comply with the Court order that it answer those interrogatories left by the defendant. There was no appearance of the defendant on that occasion. On 5 November 1991, this Court on motion struck out the defence and entered judgment restricted to the question of liability because of such failure. Whilst notice of the plaintiff's motion was given to the State, there was no appearance by the State when the motion was moved. So that on both the application to force answers, and on failure to comply, and the application to strike out its defence, the State failed to appear. That is a stinging reflection on the administration of the State lawyers' office, now the Solicitor General. I hope it does not happen again.

There is power in the Court to strike out a defence and, thus, order that judgment be signed, where default is made in answering interrogatories. In this case without the benefit of proper argument, with respect to my brother Judge, it appears no proper consideration in the interlocutory applications has been given to the circumstances in which answers to interrogatories would be regarded as insufficient. The fact that there has been no appearance and, consequently, no argument by the defendant on the question of sufficiency does not excuse the Court from a proper consideration of the particular interrogatories sought to be answered. Secondly, if it should be shown that answers are insufficient, then consideration will need be had to the effect on the applicant's case. But to strike out a defence is a most serious course to adopt when, for instance on hearing, the party in default can be penalised by a cost order if the applicant can show that his case has been unduly prolonged by the respondent's attitude. The respondent/defaulter may also be prevented, on hearing, from bringing evidence which would be vexatious or oppressive having regard to his attitude in his answers to interrogatories.

In this case, for instance, it can be seen that the defendant has conceded in its pleadings that the plaintiff had the job if he would but accept, which the State said he failed to do.

In the interrogatories at Q.15, the defendant was asked, "Did the defendant make a selection for the position. If yes, who was selected and when was the selection made?"

Answer: "Mr Joe Naguwean was selected early in September and was offered the position in a letter forwarded to him by the Clerk on 8 September 1989. In that letter he was asked to advise his acceptance in writing and the date he proposed to commence duty".

Now a number of interrogatories that preceded Q.15 related to matters that were of insignificance once that answer was given, bearing in mind the admission in the defence. The answers given those earlier questions were (obviously) "not necessary to answer." Later, Q.19 asked, "Did the plaintiff hold any discussions and meetings with the defendant including its servants or agents between September 1989 and January 1991. If yes what were the nature of these discussions and meetings?" Answer: "Not necessary to answer, plaintiff already aware of these matters". It is clearly a matter for evidence, and not a proper interrogatory. It is necessary to look to the particular interrogatory and its effect on the plaintiff's case before finding such a drastic step to strike out the defence is warranted. I would suggest only in circumstances where such defence has been shown to be frivolous or vexatious, or entirely without merit, should the respondent suffer such ignominy.

Consequently, I consider that the Court, by acceding to the plaintiff's request to strike out the defence in these circumstances, has caused the defendant prejudice beyond that justifiable. In Lyell v Kennedy [1884] UKLawRpCh 102; (1884) 27 Ch D 1 at p 21, Cotton LJ considered circumstances in which answers to interrogatories would be regarded as insufficient.

The plaintiff read an advertisement which sought applications for a position as Principal Clerk of Committees. It prescribed a level in the Parliamentary Service and a salary of K16,470 p.a. He applied and after 2 interviews he was successful. The Clerk of the National Parliament, Mr S.G. Pentanu, wrote on 8 September 1989 so informing the plaintiff and asked him to write confirming acceptance of the position and the date he would like to commence duties in the new year. The appointment was deferred as the Clerk said "in view of your studies and the financial restraints faced by the Government as a consequence of the Bougainville crisis."

On 24 September 1989, the plaintiff wrote saying, in part, "before I formally write to accept this offer would your office be kind enough to provide me with details of the Terms & Conditions of Service."

On 21 November, 1989, the Clerk wrote with details of the terms and conditions. The material parts were that probationary permanent appointments now exist, that the terms and conditions are by and large the same as in the National Public Service (of which the plaintiff was and is a member), that the Parliamentary Service is unable to offer housing, a salary of K17,295 p.a. and recognition of university service for furlough and sick leave purposes.

By notations in the margin of this letter, it appears, as was confirmed in his evidence today, that Mr Naguwean sought a particular favour in relation to housing.

Time went by, and the next written communication was that of the plaintiff, writing to the Clerk on 14 January 1991 expressing his disappointment on learning that the position was filled by someone else. On 10 January 1991, the Clerk wrote to the plaintiff:

"I am writing to advise that the position for which you were accepted but could not take up because of accommodation difficulties, has now been filled from within the Parliamentary Service. This change was made just recently."

Mr Naguwean gave evidence today. He did not impress me. He was self-righteous to a fault. So far as those particular conditions of employment were concerned, relating to housing, probationary period and a car, Mr Naguwean says the Clerk assured him he would be treated differently to other applicants. This is contradicted by Mr Pentanu in his letters. For instance, on 21 November 1989, Mr Pentanu said, "As I have advised you personally the Parliamentary Service is unable to offer its employees housing as it shares the same Government owned housing resources as the Public Service." In his letter of 10 January 1991, Mr Pentanu referred again to the plaintiff's unhappiness with the failure to provide housing. In other words the state of affairs appertaining as at 21 November 1989, that there was no housing, had not changed. The plaintiff may have wished to be supplied with accommodation, for his notes in the margin of his letters annexed to his affidavit refer to discussions with Mr Pala to get him a home.

Mr Pentanu was not cross-examined on the express assertion by Mr Naguwean that Mr Pentanu had resiled subsequently in conversations with the plaintiff, from his statement in his letter of 21 September denying housing. I, accordingly, do not believe Mr Naguwean when he says that, so far as housing is concerned, it was a condition of his employment that he would be treated differently.

Mr Pentanu was cross-examined, however, on the plaintiff's assertion that the probationary period of 12 months would be waived in Mr Naguwean's case. In his evidence in chief, he said he had no recollection of saying anything like that. In cross-examination, Mr Pentanu said, in answer to a question suggesting that the plaintiff's major concern was a waiver of the probationary period, that if it was raised, no applicant was treated in any different way. I am so satisfied that that was the case when I have regard to the terms of the letter of 21 November 1989, which followed the offer of appointment to the plaintiff as the successful applicant. In the letter, the Clerk said "probationary permanent appointments now exist" There is, in fact, no discretion in the Clerk. Qualifications for admission to the Service and probation are governed by the regulations to the Parliamentary Service Act 1975 Ch 26. By s 3 every appointment is probationary for a period of 12 months unless the Speaker, in a particular case, extends the period. An appointee's services may be dispensed with during the period. At the end, however, the Speaker may confirm or annul the appointment. If not annulled, it may be deemed to be confirmed.

There is no discretion in the Clerk to waive probation in the particular case of this plaintiff. In any event, I accept the evidence of the Clerk when he says he held out no such possibility to this applicant. So, again, I do not believe the plaintiff when he says he was to be treated differently so far as probation was concerned.

Even though the plaintiff's evidence is unsatisfactory on these aspects, I still must look afresh to his claim for special damages, notwithstanding that I do not believe him on the aspects of probation and housing. He may well have been seeking public housing all this time, but it was not held out to him as a term or condition of his employment.

Mr Naguwean says he was contracted to write captions for some 34 photographs provided to Parliament by the university library, of which it must be remembered, he was, and is still, a staff member. He says this agreement was made with the Clerk, Mr Pentanu. The terms were that he would do the work in his own time, on recreational leave, and that, on completion, some moneys would be given. In fact, the job, the plaintiff says, took him 144 days. He claimed 42 days at the rate of K300.00 per day, a rate which he considered fair for it was applied by the university consultancy company, and a further 102 days at a nominal rate of K100.00 per day. No captions were ever furnished. No report was ever given the Clerk and, as far as I am concerned, no agreement ever existed that this plaintiff could charge the Parliament whatever he liked for captions to photographs supplied by his own library. As Mr Pentanu said, he would be happy with a reasonable payment, but K22,000 (when a year's salary for the most senior position of Principal Clerk of Committees attracted K17,295.00 p.a.) clearly shows this plaintiff up, in this part of his claim, as a charlatan. The plaintiff even mentioned in the discussions that the university library was assisting. These photographs were apparently hung in the Parliamentary refreshment rooms.

I mention also that the plaintiff on his own evidence today had to admit he had not given notice of resignation from his position at the university library. This directly contradicts his sworn statement in his affidavit where he said that he "had taken appropriate steps to terminate my services with the University by giving notices etc."

I, accordingly, find that there was no agreement to caption these photographs for a sum exceeding K22,000.00, for the plaintiff has failed to satisfy me that any agreement included a term that he could unilaterally determine the remuneration or that the period of contract was wholly in his discretion. I do not accept his evidence on these aspects for, as I have shown, I find his evidence unreliable. I am satisfied captions were mentioned but that, because of the vagueness of the discussions coupled with the fact that the primary responsibility lay with the university in any event to caption these photographs, no agreement can be implied that the plaintiff be paid K22,800.00 for such a commonplace task.

It must be remembered that a contract for personal services (using that phrase in its loose sense) is not specifically enforceable at the suit of either party. Consequently, the relief which the plaintiff seeks here is a legal remedy in damages. Now the plaintiff seeks damages calculated by reference to the period available before retirement, in this case some 20 years. In my view, to allow such claim, even taking into account exigencies, would inflict a hardship on the defendant so disproportionate as to amount to a penalty. As such, it is not recoverable. It cannot be a reasonable pre-estimate of probable damage in the plaintiff to look to this period, for even if the anticipated fortnightly salary differential was capitalised in today's money value, an extravagant and extortionate sum would result. The plaintiff never entered upon the job. It, consequently, would be a fiction to approach the calculation of damages in the manner suggested by the plaintiff. To give damages based on a state of affairs which even now does not exist, would be wrong. Had he, in fact, resigned in anticipation of the new job, would I be obliged to calculate damages without discount on the basis that he would have remained unemployed for the whole period? Of course not, for the plaintiff is expected to mitigate his loss (Brace v Calder [1895] UKLawRpKQB 109; [1895] 2 QB 253).

But the facts clearly point to a reluctance in the plaintiff to commence employment until he had arranged matters relating to housing and the probationary period, for instance, to his satisfaction. That was not done and, consequently, he never embarked on such employment. In the circumstances, since the contract was not specifically enforceable at the instance of the Parliament, and the plaintiff had postponed taking up the position, damages calculated by reference to a 20-year period of employment, in my view, could not be said to be reasonably foreseeable.

Despite Mr Baker's concession that employment in the public service of PNG is analogous to an income for life, this Court cannot countenance that principle in this case. It would give rise to such an unconventional cause of action that the State would be inundated by the very many invisible employees in whom supposed offers of employment would give cause to bring suit "in expectation for life". I am clearly of the view that damage calculated by reference to a 20-year anticipated working life is unreasonable, amounting to a penalty and, as such, is not recoverable.

The better course is, as Mr Baker says, by relying on the facts, to look to the period in which the State may be bound (prescribed by regulation) as affording the Court some assistance in determining an appropriate sum for damages.

His employment may have been annulled and, in this case, could be said to have been annulled in futuro. (It is not a case where dismissal need be considered). The proviso in Parliamentary Service reg 3(4) that the probationary appointment may be annulled does provide a basis for calculation of appropriate damages related to a probationary period. In fact, the position has been filled, the plaintiff never having embarked on the work. In other words, he could have had his probationary appointment annulled without recourse by the employee after 12 months satisfactory service.

On these facts, Mark v Western Highlands Provincial Government (1990) unpublished N929 can clearly be distinguished for here the plaintiff never started in his employment, whilst in that case the employee after many years service was not re-engaged in the face of a statutory admonition so to do.

I also mention the case of Rooney v Forest Industries Council [1990] PNGLR 407. That case also related to an assessment of damages for wrongful dismissal. The plaintiff there, however, was employed under a particular contract for a term of years. But that clearly is not the case here, where the plaintiff was to be employed under the terms and conditions prescribed by the National Parliamentary Service. Since the plaintiff here has not embarked on that service, I need not enquire into those particular terms and conditions, for I consider the measure of damages can be related to a probationary period for the reasons that I have given.

Had the plaintiff embarked upon a new career with the service, been confirmed in his appointment but then terminated in circumstances amounting to breach of contract, then these terms would be relevant, as no doubt would be the details of awards implemented or in force in the National Public Service and the associated Parliamentary Service, in considering the question whether an employee is prima facie an employee for life in the sense considered in Salt v Power Plant Co [1936] 3 All ER 322 or if he is but a permanent public servant with the possibility of termination in accordance with the current awards and practice.

I accept that an appropriate commencement date of the imputed probationary period is 10 January 1991, the date of formal notification to the plaintiff by the Clerk. I use this date only for the purpose of affording me a guideline for wages then payable, and not as some notional period of employment. He was never employed, and his damages relate to that breach. The plaintiff had accepted postponement of his anticipated commencement and had not, contrary to his assertions in his affidavit, "taken appropriate steps to terminate my services with the University by giving notices etc". His viva voce evidence before me was clearly that he had not given notice relinquishing his position. Nevertheless, the defendant concedes that the plaintiff would have been able to start in January 1991.

Mr Baker conceded I may use the gross figures for salary set forth in 1989, the increases since then not being disproportionate. Mr Naguwean's gross salary was then K12,565.00. The Principal Clerk of Committee's salary was advertised at K17,295.00, a difference of some K4,730.00 p.a. I do not consider Public Officers Superannuation Fund contributions, furlough payments or leave entitlements, for these all applied in similar fashion in the Parliamentary Service as they do to Mr Naguwean's present service. In other words, consideration of his gross pay scales will do no injustice in so far as these particular entitlements are concerned over such a short period. Since this sum of K4,730.00 is not, in fact, salary but damages for lost opportunity, no income tax is attracted as if it were salary.

Whilst the State has failed to effectively argue interlocutory matters whereby default judgment restricted to the fact of employment was given the plaintiff, I am not satisfied the plaintiff has shown any facts which give rise to his alleged distress, frustration, or disappointment. He continued to argue before me that a condition of his acceptance of the Parliamentary offer of employment was that the Clerk had waived, by implication, the clear regulatory requirement for a probationary period. On that basis alone, it is clear the State could argue that there was no meeting of minds and, hence, contract of employment by agreement, for the Clerk had no power to waive statutory requirements. On the facts, I am satisfied that the Clerk had not held out to the plaintiff that he could expect exemption. On the plaintiff's own letter of 24 September 1989, he had reserved acceptance of the offer pending clarification of terms, while his notes on the margin of the Clerk's reply of 21 November 1989 clearly support the State's defence, originally pleaded. Mr Naguwean was still endeavouring to alter the terms and conditions offered. The plaintiff had not unequivocally accepted the offer in writing. This merely raises the issues for argument, issues which are no longer relevant on the question of liability, but which remain relevant when I consider the plaintiff's bona fides in relation to his claim for distress. His notations clearly show that he was dissatisfied with the lack of housing and the probationary nature of the appointment and show a request for accommodation in institutional housing. With these aspects a cause of concern to the plaintiff, it can hardly lie in him now to complain that he has suffered distress at losing the opportunity the position afforded him when he appears not to have been happy with the terms and conditions originally offered. I am not satisfied this head of damage has been proven, especially when I consider the principles, with which I concur, enunciated by the Chief Justice in Harding v Teperoi Timbers Pty Ltd [1988] PNGLR 128. I would allow only a nominal sum of K1,000.00.

So far as special damages claimed relating to preliminary expenses for the purchase of building land are concerned, I find they are unrelated to employment. The land application fee in the joint names of the plaintiff and his wife was paid on 8 June 1989, before the plaintiff wrote on 24 September 1989, acknowledging receipt of the Clerk of Parliament's offer of a position. The claim fails. Similarly, so does the claim for a project fee quantified by the plaintiff in the sum of K22,800.00 for captions to some 34 photographs made available by the university library to Parliament. The claim is grossly excessive, and without foundation.

While notionally the damages have been calculated by reference to a difference in salary paid for a 12-month period, the right to damages, in fact, crystalised on 10 January 1991 when the Clerk prevented the possibility of the plaintiff's employment. There is no need to await expiration of any notional probationary period, for the position was filled. The right to claim thereupon arose. The appropriate order, then, is to allow interest on the judgment amount from the date of the writ on the 2 February 1991. I consider 8% p.a. an appropriate rate.

There shall be a verdict for the plaintiff in his claim for breach and judgment in the sum of K5,730.00, made up by K4,730.00 for breach and K1,000.00 for disappointment. Interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act at 8% p.a. shall be added to the judgment from the 2 February 1991 to date. Since the plaintiff's judgment falls below K10,000.00, I award half costs.

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Papua New Guinea Law Reports

Naguwean v The State [1992] PNGLR 367 (15 May 1992)

Papua New Guinea Law Reports - 1992