N2226

PAPUA NEW GUINEA

[In the National Court of Justice]

WS 267 OF 2000

BETWEEN

MICHAEL KANDIU
Plaintiff

AND

AUSTRALIA AND NEW ZEALAND BANKING GROUP (PNG) LTD
Defendant

AND

AUSTRALIA AND NEW ZEALAND BANKING GROUP (PNG) LTD
Cross-Claimant

AND

MICHAEL KANDIU
Cross-Defendant

WAIGANI: Davani, J.
2002: March 18th, 19th
: April 23rd

Master and Servant – Contract, "Letter of Offer" and "Service Agreement" – termination during 	probationary period of employment, whether lawful – termination, subject to requirements of notice or payment in lieu of notice, Employment Act Chapter 273 and Contract.

Liquidator and Process of liquidation – An appointed liquidator assumes total control of the company – A company’s assets and liabilities must all be declared to the liquidator, Companies Act chapter 297 ss. 298 and 303.

Counsel:
J. Abone for the Plaintiff
R. Bradshaw for the Defendant

23rd April 2002

DECISION

DAVANI, J.:	This is a claim by the plaintiff seeking damages for wrongful dismissal. By an amended Writ of Summons and Statement of Claim filed on 4th June 2001, the plaintiff claims the reliefs sought:

"1.	Full benefits and entitlements for the probationary period of six (6) months;

2.	Full benefits and entitlements for the remaining three (3) years and eleven (11) months of employment with his former employer, PNG Bottle Industries;

3.	General damages for distress, frustration and anxiety suffered by the plaintiff under the common law and relevant statutory laws of Papua New Guinea;

4.	Costs; and

5.	Any other orders this Honourable Court deems fit and proper in the circumstances."

The defendant also, by an Amended Defence and cross claim, claims an amount of K1,000.00 with interest and costs.

1.	UNDISPUTED FACTS

The undisputed facts are that the plaintiff was employed by the defendant as Manager, Sales and Services at its Waigani branch. This employment eventuated as a result of a letter of offer which was sent to him dated 25th October 1999 by the Defendant bank. In that letter the bank set out its terms and conditions. Those that are of significance, I mention and which are:

"5.	Probationary Period

Your appointment is subject to a six months probationary period from date of employment. During this period you must demonstrate to the bank that you have the necessary skills and ability to undertake the role(s) you are assigned to. Should your performance not be at an acceptable level during the 6 month probation period then employment will be terminated.

A report will be completed at the end of six months and subject to your performance, appointment and permanent staff will be confirmed.

9.	Termination of Services

Either party may terminate the contract of service by giving one month’s written notice, unless of course there has been a breach of contract in terms of the service agreement that can lead to dismissal without notice."

The plaintiff then signed the defendant’s Service Agreement on 8th November 1999.

The plaintiff accepted the defendant’s offer of employment on 20th October 1999 and commenced work with the defendant on 8th November 1999. The plaintiff was recommended to the defendant by Price Waterhouse Coopers in its capacity as an employment agent.

Whilst in the defendant’s employ, the defendant then received information from the plaintiff’s former employer that he, the plaintiff, had taken monies belonging to his former employer. This then led to the defendant conducting investigations which revealed that the plaintiff has indeed sent a letter dated 26th October 1999 to his former employer enclosing a cheque of K1,000.000 to repay money he had taken from his former employer and also asking that his former employer not divulge the fact to others.

The defendant bank was quite concerned as it required that all employees portray a high degree of honesty, be honest in all their dealings and must have no prior unfavourable records. As a result, it then terminated the Plaintiff’s employ, done by its letter of 2nd December 1999.

The defendant bank also claims, and which is not disputed, that the plaintiff following his termination, took a cash advance of K1,000.00 on the bank visa card issued to him as a bank employee, on the same day i.e. 2nd December 1999. The Bank claims that then, the plaintiff was no longer in its employ and that he was not entitled to use that visa card. A stop was then placed on that account. It later became known to the defendant that several attempts were made by the plaintiff to withdraw more monies using that card but which were unsuccessful. The card was then later removed from the plaintiff.

The plaintiff was paid one month’s salary in lieu of notice.

2.	EVIDENCE AND THE LAW

The plaintiff was formerly employed as the Group Operations Manager with PNG Bottle Industries (‘PNGBI’) of Port Moresby. He claims that he had to foregoe a four-year contract to work with the defendant.

There is evidence from Mr. Robert Southwell, Accountant of the accounting firm KPMG, Chartered Accounts, that Mr. Southwell was appointed liquidator of the PNGBI by the National Court on 4th August 1999. During his period of appointment as liquidator, the Papua New Guinea Banking Corporation (‘PNGBC’) was to exercise its power of sale under a Mortgage it had over the PNGBI premises and so was in possession of the premises owned by the PNGBI, a warehouse at the Gordons Industrial area. The PNGBC then took and continues to take all rents paid by tenants occupying the said premises. The liquidator informed the court that he has not carried on the business of the PNGBI other than to allow the payment of rent to PNGBC and collection of outstanding debts. The liquidator confirms that he is unable to verify if the plaintiff was employed on the contract by the PNGBI as the books and records of the PNGBI were not "discovered" in the discovery process or delivered to the liquidators by the officers of the PNGBI after he was appointed liquidator. Mr. Southwell also informed the court that in his capacity as liquidator of PNGBI, he did not employ anybody nor was he aware of any persons in PNGBI’s employ during the period of liquidation, which incidentally, is still current.

The plaintiff argues strongly that because ANZ employed him, he had to give up the lucrative position he then held with the PNGBI.

I have seen from evidence that at the time the plaintiff was appointed to the position with the bank, the PNGBI was already in liquidation. A liquidator once appointed assumes total control of the company. If the plaintiff was in PNGBI’s employ, on a contract of employment as he claims this information should have been passed on to the liquidator with PNGBI’s books and records. However, we have seen that PNGBI failed or refused to comply with the liquidator’s request to submit. I do not know why this was not done. As far as the liquidator is concerned, the PNGBI did not have any employees. I will accept that based on the uncontroverted evidence by an independent expert witness, Mr. Southwell, and also that the law is specific on this point.

The law on liquidation and the duties of a liquidator is set out in ss.298 and 303 of the Companies Act of 1997.

s. 298 reads:

"298.	Effect of commencement of liquidation.

1.	With effect from the commencement of the liquidation of a company;

(a)	The liquidator has custody and control of the company’s assets; and
(b)	The directors remain in office but cease to have powers, functions or duties other than those required or permitted to e exercised by this Part; and
(c)	Unless the liquidator agrees or the Court Orders otherwise, a person shall not –

(i)	commence or continue legal proceedings against the company or in relation to its property; or
(ii)	exercise or enforce, or continues to exercise or enforce, a right to remedy over or against property of the company; and…" (My stress)

The PNGBI is still in liquidation as the process under section 299 (Completion of liquidation) of the Company’s Act has not commenced, at least evidence is that PNGBI is still in liquidation.

s. 303 of the Companies Act reads:

"303.	Principal duty of liquidator

Subject to section 304, the principal duty of liquidator of a company is –

(a)	to take possession of, protect, realize, and distribute the assets, or the proceeds of the realization of the assets, of the company to its creditors in accordance with this Act; and
(b)	….

in a reasonable and efficient manner."(My stress)

This court, in view of the existing laws on liquidation, will not accept the plaintiff’s contentions that he had to forego his employment with the PNGBI to commence work with the defendant. That is a fact the liquidator should have been informed of because the liquidator would have then dealt with the remaining portion of his contract with the PNGBI, if it ever existed, as a debt and dealt with it as PNGBI’s liability. The plaintiff would the have been paid out. He did not address this in his evidence only saying that he was a PNGBI employee even after its liquidation. That is untenable considering the process of liquidation and does not hold.

The plaintiff claims that his termination is unjust and unfair or "wrongful".

The common law principle that the employer may terminate the services of an employee at will (i.e. at any time and for any reason or none) applies in PNG subject to the requirements of notice or payment in lieu of notice as contained in a contract of employment where there is a Contract of Employment or governed by the Employment Act chapter 273. This is a case that is purely master and servant. There is no element of public office hence principles of natural justice are inapplicable. They would be applicable if the employee’s termination was wrongful as perceived by the contract of employment. In this case the employee was given one month's notice, a fact stated clearly in clause 9 of the letter of offer, in this case the Contract.

The plaintiff and the defendant also executed a "service agreement" on 8th November 1999. This agreement at paragraph 11 sets out the instances of termination which are as follows:

"11.	The employment of the officer shall be terminated by any of the following events;

(c)	(ii)	The bank’s immediate termination of service and payment to the officer of one week’s salary in lieu of one week notice in writing;

(c)	by the officer’s dismissal from the bank’s service for;

(i)	dishonesty, wilful insubordination, neglect of duties, or the wilful breach by the officer of any of the bank’s regulations for the time being in force or any of this agreement’s conditions.
(ii)	any other conduct or act which in the opinion of the bank constitutes misconduct".

The defendant also had the option to pay one week’s salary in lieu of one week notice in writing as provided in clause 11 of the service agreement. However it did not do that. It opted instead to give the plaintiff sufficient notice under the terms and conditions of the plaintiff’s employment re the letter of offer, and paid him a month’s salary in lieu of notice.

The defendant bank by its letter of 2nd December 1999 signed by its Managing Director Frank Gamble informed the plaintiff of the following:

"Dear Michael,

Following careful consideration your employment status with the bank we advise that your probationary period is terminated effective immediately.

The bank will pay your salary to 31st December 1999 however, this will be withheld to settle outstanding debts.

Yours sincerely

(signed)
Frank Gamble
Managing Director"

The defendant’s letter of offer to the plaintiff states at paragraph 5, the conditions of employment during probationary period. It states that "…should your performance not be at an acceptable level during the six months probation period then employment will be terminated."

This is in effect what the defendant bank has done, it found the plaintiff’s performance not to be at an acceptable level, and so terminated it.

Furthermore, such termination was proper as provided for under section 36 of the Employment Act which states:

"36.	Grounds for termination of contract

1.	An employer may terminate the contract of service without notice or payment instead of notice.

2.	Or any other ground which he would be entitled to terminate the contract without notice at common law".

This is what the defendant bank has done.

I find that a probationary employee does not have the security of employment that a permanent employee would have. In any event, both classes of employment are governed by the contract under which each is found. In this case, a probationary employee would be terminated if performance is not at an acceptable level.

Having found the termination to be proper, I dismiss all other claims as I find them to be without merit. I also order that the defendant pay the plaintiff the sum of K1,000.00 it owes it together with interest assessed at 8% from the date the funds were withdrawn on 2nd December 1999 to date of such assessment is provided for under s. 1(1) of the Judicial Proceedings (Interest on Debts and Damages) Act chapter 52 as the cause of action arose on 2nd December 1999 when the funds were withdrawn by the plaintiff.

Further orders are that the plaintiff pay the defendant’s cost of these proceedings to be taxed if not agreed.
_______________________________________________________________________
Lawyer for the plaintiff:		Mawa Lawyers
Lawyer for the defendant:		Blake Dawson Waldron Lawyers