[2000] PNGLR 398

PAPUA NEW GUINEA

[national court of justice]

GEOFFREY McLAUGHLIN

v

AIR NIUGINI PTY LIMITED; AND
NATIONAL AIRLINE COMMISSION

waigani: sevua j
8 August; 10 November 2000

Contract of Employment — Termination — Entitlements — Retirement benefits — Long Service Leave — Whether plaintiff entitled to long service leave — Port Moresby General Employment Award.

Civil Practice and Procedure — Defence — General denial — No defence — Order 8 Rule 28.

Facts

The plaintiff was employed by the defendants in various managerial positions over a period of 16 years and 4½ months pursuant to a contract of employment. His contract was then terminated with two months written notice as provided within the contract. Since the contract did not provide for long service leave entitlements, the issue then was whether he was entitled to such.

In response to the plaintiff’s statement of claim, the defendant pleaded a general denial.

Held

1.	Even though the contract of employment did not provide for long service leave entitlements, as a matter of law, the plaintiff is entitled to 6 months long service leave after completion of 15 years continuous service pursuant to Clause 7 of the Port Moresby General Employment (Amending) Award 1975. Franz Mayer v Erwin Lutz and Elu Pty Ltd [1996] PNGLR 163 followed.

2.	The defendants’ defence is a mere denial, which amounted to no defence pursuant to O 8 r 28 National Court Rules.

Papua New Guinea cases cited

Franz Mayer v Erwin Lutz and Elu Pty Ltd [1996] PNGLR 163.
Hornibrook Constructions Pty Ltd v Kawas Express Corporation Pty Ltd [1986] PNGLR 301.

Counsels

G Sheppard, for plaintiff.
G Poole, for defendants.

10 November 2000

Sevua j. The plaintiff sues by a writ of summons for unpaid retirement benefits, namely, long service leave entitlements, which he claimed to be in the sum of K69,214.65, and which he also claimed, that the defendants had refused to pay.

The plaintiff was formerly employed by the first defendant who assumed the business of the second defendant, which previously traded under the name, Air Niugini. He had been employed for a little over sixteen years. He commenced employment on 27 July 1980 and was terminated on 17 December 1996. He held various positions, from sales manager to standard manager to public relations manager and finally, public relations and marketing manager. His employment with the first defendant was by virtue of an employment contract.

On 17 December 1996, then managing director, Moses Maladina, wrote to the plaintiff advising that his services were no longer required and that the personnel department would shortly be advising him of his final entitlements. On 18 December 1996, the director of personnel and properties, Abel Koivi, advised the plaintiff of his final entitlements calculated on the basis of his rate of salary at that time. The plaintiff was also advised that his employment contract was terminated in pursuance of clause 15.2 of his employment contract, which states:

"The employer may terminate this Agreement at any time by giving the Employee two (2) months written notice or by payment in lieu of such notice."

The employment contract provided for recreational leave in clause 9, sick leave in clause 10, leave of absence or special leave, clause 11 and compassionate leave in clause 12, however, there was no provision for long service leave.

The plaintiff's statement of claim pleads the Port Moresby General Employment Award in paragraph 12, and in paragraph 13, he pleads that he is entitled to accumulated long service leave entitlements at the rate of 1.733 weeks per year of service. The defendants deny those allegations, but offer no reason for their denial. In fact, having perused the defendants’ defence, it became evident that the defendants’ defence was nothing more than mere denial which amounted to no defence at all. The law is that a defendant cannot plead general denial. I will revert to that issue later as the plaintiff’s counsel had alluded to it at the beginning of the trial.

I find as a fact that the contract of employment between the parties herein did not include a provision for long service leave. However, the plaintiff’s claim for long service leave is not based on his contract of employment, but by virtue of the Port Moresby General Employment Award, which has been pleaded in the statement of claim.

Clause 7 of the Port Moresby General Employment (Amending) Award 1975, Award No. 13 of 1975 clearly provides for long service leave. It is in these terms:

"(a)	An employee shall be entitled to six months long service leave after completion of fifteen years continuous service with the same employer."

There is no dispute that the plaintiff had been employed by the first defendant for a little over 16 years. There is evidence from the plaintiff which the defendants have not refuted, that the long service leave entitlement is paid by other employers. I am satisfied that under the General Award, the plaintiff is entitled to long service leave benefits.

It appears that the plaintiff's termination was later changed to retirement following discussions between the plaintiff and the general manager, Moses Maladina. The plaintiff said in his evidence that this discussion took place over a dinner, and he was verbally advised by Mr Maladina. There is no evidence to rebut that. However, whether the plaintiff was terminated or retired does not matter. Either way, I find he is entitled to long service leave benefits.

Counsel for the plaintiff referred to Franz Mayer v Erwin Lutz and Elu Pty Ltd [1996] PNGLR 163. In that case, long service leave was one issue discussed, and Doherty, J., specifically alluded to the plaintiff’s claim in that case which included "long service leave in accordance with what appears to be an industrial award." I presume that reference to an "industrial award" in that case meant the Port Moresby General Employment Award 1973, which was amended in 1975. The Court in that case awarded the plaintiff the sum of K4,562.63 in long service leave entitlements.

I consider, as I have already alluded to above, that the plaintiff is entitled to long service leave as pleaded in his statement of claim.

In the plaintiff's statement of claim, he pleaded this award in paragraphs 12 and 13. Mr Sheppard said that these and other paragraphs in the statement of claim provide a mathematical calculation of the plaintiff's long service leave entitlements. There is evidence that the plaintiff’s contract provided for an Exchange Rate Stabilization Plan at the rate of K1 = US$0.47. I consider that since the plaintiff has not pleaded the rate of K1 = US$1.04, he is not entitled to it, even though there is evidence of that rate. He cannot get what he has not pleaded in his statement of claim. There are sufficient authorities for that principle.

In assessing the plaintiff’s claim, I am unable to agree with the figures that he claimed in his statement of claim especially paragraphs 16, 18 and 19. The actual calculations I arrived at are different to the respective amounts of K39,511.21 in paragraph 16 and K69,214.65 in paragraphs 18 and 19.

The uncontested evidence of the plaintiff is that he commenced employment on 27 July, 1980 and was terminated on 17 December, 1996. That is a period of 16 years and 4½ months. His annual salary was K65,852.02, which would work out at K1,266.39 per week in a year or 52 weeks. The plaintiff's entitlement of 1.733 weeks per year which he claimed in his writ, and which has not really been refuted, would provide him with 28.46 weeks of long service leave entitlement over 16.42 years. The weekly rate of pay of K1,266.39 over 28.46 weeks would give the plaintiff the sum of K36,041.46, not K39,511.21 as claimed (K1,266.39 x 28.46). In applying the exchange rate stabilisation of US$0.47 to a Kina, the plaintiff would be entitled to K76,683.96, not K69,214.65 as claimed (K36,841.46¸ 0.47). In my view, the plaintiff is entitled to the sum of K76,683.96, not K69,214.65.

Even if the defendants say that I am wrong in arriving at the amount I have assessed, it is my view that they have no defence. And this brings me to the issue of general denial, which I adverted to earlier.

It is a fact that the defendants’ defence is a mere denial of the plaintiff's allegations. In making general denials, the defendants have neither pleaded facts nor offer what they assert to be theirs or the plaintiff's correct position. They have simply denied the plaintiff's allegations. I therefore consider that these mere denials do not amount to a defence at all. Order 8 r 28 National Court Rules prohibits general denials. It states, "a party shall not plead the general issue."

The leading authority on that issue is Hornibrook Constructions Pty Ltd v Kawas Express Corporation Pty Ltd [1986] PNGLR 301. His Honour, the Deputy Chief Justice held:

"the purpose of Order 8 r 28 is to prevent a defendant from making a general denial without specifically denying the facts or basis upon which the plaintiff's cause of action is based and so informing the plaintiff and the court of the precise nature of the defence."

Mr Sheppard did raise this issue at the beginning of the trial and perhaps if he had pressed on with an application and ask for a preliminary ruling, the trial may not have proceeded this far as the defendant’s defence would have been struck out under O 8 r 28 and also on the basis of the authority I have referred to.

Nevertheless, I am satisfied that the plaintiff is entitled to long service leave entitlements on the basis of what has been said. I find the defendants therefore liable to the plaintiff. I find that, even though the contract of employment did not provide for long service leave, as a matter of law, the plaintiff is entitled to long service leave at the rate of 6 months for every 15 years of continuous service in pursuance of clause 7 of the Port Moresby General Employment (Amending) Award 1975.

On the basis of what has been calculated, I find that the defendants are liable in damages to the plaintiff in the sum of K76,683.96. Judgment is therefore entered in favour of the plaintiff in the sum of K76,683.96 with interest at 8% from the date of filing of the writ to the date of judgment. I further order post judgment interest at the rate of 4% until final settlement. Costs will follow the event.

Lawyer for plaintiff: Maladinas Lawyers.
Lawyer for defendant: Pato Lawyers