Baboa v PNG Communication Workers Union [2006] PGNC 196; N3043 (31 March 2006)

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LAW OF EMPLOYMENT – contract of service – oral contract – terms and conditions of contact – final entitlements – express and implied terms – Employment Act, Section 15 (record of terms etc of employment) – duty of employer to make written record of terms and conditions of the contract at time of engagement – consequences of not making or failing to produce a written record.

The plaintiff, a union employee, had his employment terminated by the defendant, his employer, the union, after his position in the union was made redundant. He disputed the amount of money the union proposed to pay him as 'finish pay', arguing that it was not enough and that he was entitled to the same sort of redundancy and retrenchment payments as members of the union under an enterprise agreement between the union and the union members' employer. The defendant claimed that the plaintiff was not a member of the union so he could not be a beneficiary of the enterprise agreement. The dispute was not resolved and the employee sued the union, his former employer, for breach of contract.

(d) the defendant did not satisfy the Secretary for Labour and Employment or an Arbitration Tribunal to the contrary.

CJ – Chief Justice
CPI – Consumer Price Index
DCJ – Deputy Chief Justice
J – Justice
kg – kilogram
Ltd – Limited
MILOL – money in lieu of leave
MILON – money in lieu of notice
N – National Court judgment
No – number
pa – per annum
PNG – Papua New Guinea
PNGBC – Papua New Guinea Banking Corporation
PNGLR – Papua New Guinea Law Reports
Pty – Proprietary

This was an action in which the plaintiff sought damages for breach of a contract of employment.

1. CANNINGS J: INTRODUCTION: This case is about a man who was employed by an industrial union. He was sacked. A dispute arose about his finish pay. The dispute could not be resolved so the man brought the matter to court.

3. The defendant terminated the plaintiff's employment with the union on 9 September 2002. He was told that his position had become redundant and there was no work for him to do. The plaintiff accepted the defendant's right to terminate his employment but argued that the defendant should pay him redundancy and retrenchment entitlements equivalent to those enjoyed by members of the union in the enterprise agreement that had been negotiated and entered into with Telikom PNG Ltd (the union members principal employer) in 2001. The defendant disagreed. The dispute could not be resolved. So the plaintiff through his lawyers, Poro Lawyers of Port Moresby, on 2 May 2003 filed a writ of summons and statement of claim, naming his former employer, the union, as the sole defendant.

4. The plaintiff's cause of action is breach of contract. He claims he has a contract with the defendant; that under that contract he had a right to be paid redundancy and retrenchment benefits referable to the 2001 Telikom enterprise agreement; that the terms and conditions of the contract were breached by the defendant's refusal to pay proper entitlements to him; and therefore he is entitled to an award of damages. The damages he claims include the full entitlements he says are due to him and general damages for distress and frustration.

5. The case is not about alleged unlawful termination of employment, but about interpretation and application of the terms and conditions of a contract of employment.

6. Mr Furigi, for the plaintiff, tendered two documents by consent and called the plaintiff, Roger Baboa, to give oral evidence.

7. Column 1 of the table below gives the exhibit number, column 2 describes the deponent and date of the affidavit and column 3 summarises the contents.

Exhibit	Description	Content
A	Affidavit: Roger Baboa, plaintiff, 18.07.03	States that he commenced employment with the defendant on 2 February 1998 and was appointed as Education Officer – he comes from Tufi, Oro Province. He was engaged on an annual salary of K18,624.32 plus; housing allowance of K3,900.00 pa; annual leave of three weeks plus airfares for two adults and two children. On 9 September 2002 he went on recreation leave and on the same day was issued a termination notice – grounds of termination were organisational restructure effectively abolishing the training and educational functions of the defendant – was given one months pay in lieu of notice – claims that he is entitled to redundancy and retrenchment payments calculated by reference to the enterprise agreement dated 11 July 2001 between the defendant and Telikom PNG Limited – on 14 February 2003 the defendant paid him K2,000.00 pursuant to his final entitlements.
B	Airfare records	This document shows the airfare for the plaintiff and his family from Port Moresby to Popondetta.

8. The plaintiff Roger Baboa adopted his affidavit in examination-in-chief.

9. In cross-examination the plaintiff stated that he was employed with the defendant for four years and seven months. On 9 September 2002 he commenced his recreation leave and attended a conference in Hong Kong. While on leave a notice of termination of his employment was served on him. The reason given for termination was redundancy. He accepted the right of the defendant to terminate his employment but argued that he was entitled to redundancy and retrenchment payments pursuant to the enterprise agreement that his employer, the defendant, had with Telikom PNG Limited.

10. He stated that he had been involved in the union movement since the late 1970s. He regards redundancy and retrenchment benefits as an important part of an employee's rights. He took the view that he had participated in negotiating such entitlements for members of the union that he worked for, so was only natural that the employees of the union should get the benefit of similar entitlements. He acknowledges that he was never a member of the union as such. However, it became normal practice for the union employees to enjoy the same sort of benefits negotiated on behalf of the union members. This included wage increases, CPI adjustments and other benefits and improvements in conditions. They were regarded as spin-off benefits of successful negotiations between the union and the principal employer, Telikom PNG Ltd.

11. He regards the sort of benefits he was asking for upon termination, an ex-gratia payment of K6,396.73, as a normal entitlement when someone is made redundant. He claims that the amount of MILOL should be four months in lieu of notice.

12. He and his family have endured a lot of hardship since he was terminated and unable to resolve his dispute with the defendant. It has been a disaster for the family. He has not been in a position to pay rent. His wife has lost weight. Life has become chaotic. He has been on the verge of being evicted from his house. The water has been cut off. He expected better treatment from his former employer especially as it is a union set up to look after the rights of workers. He thought that they would keep him on the payroll until they paid him all his entitlements. That has not happened.

13. The plaintiff stated that he was given an appointment letter when he was first engaged. Other than that he signed no other documents. He made a request for rental assistance and the defendant agreed to assist him with K150.00 per fortnight. He does not agree that there was really an organisational restructure that led to his position becoming redundant. But he sees no point arguing about that now as his employer had made the decision to terminate his services. His main demand was that the defendant pay him out according to the Telikom enterprise agreement. He had received other benefits under that agreement. He was paid wage increases and received other improved benefits when the conditions of the Telikom employees improved. He concedes that he was not a member of the union and therefore not a party to the enterprise agreement.

14. In re-examination the plaintiff repeated that members of the union benefited as a result of the enterprise agreement that he as a union employee had negotiated. Though there was no formal mechanism in place for the union employees to get improved conditions when the union members got improved conditions, that is what happened in practice. The union was funded by membership dues paid by fortnightly deductions from the union member's wages. It was at that time 2% of the members' fortnightly salary that was paid to the union.

17. Mr Siminzi, for the defendant, tendered one document by consent. No witnesses were called.

18. Column 1 of the table below gives the exhibit number, column 2 describes the deponent and date of the affidavit and column 3 summarises the contents.

Exhibit	Description	Content
D1	Affidavit: Emmanuel Kairu, General Secretary, PNG Communication Workers Union, 31.07.03	States that the defendant recruited the plaintiff on 2 February 1998 as Education Officer – he was put on probation until 24 July 1998 when he was permanently appointed to that position. By a letter dated 9 September 2002 the defendant gave the plaintiff one month's notice of his termination as his position had become redundant. An offer was made to pay the plaintiff's final entitlements, being pro-rata recreational leave; one month MILOL; and long service leave. The plaintiff insisted that he should be entitled to the benefits prescribed under the 2001 enterprise agreement. The defendant refused as the plaintiff was not an employee within the meaning of the enterprise agreement. The enterprise agreement was entered into between the defendant and Telikom PNG Ltd for the benefit of employees of Telikom PNG Ltd and not for the benefit of the defendant's employees. Four documents were attached to the affidavit: (A) plaintiff's appointment letter dated 10.07.98; (B) notice of termination dated 09.09.02; (C) letter to the Industrial Registrar re the plaintiff's entitlements dated 03.01.03; and (D) the enterprise agreement between Telikom PNG Ltd and the defendant dated 11.07.01.

11. The facts are largely undisputed. The plaintiff was involved in the union movement for many years before he was engaged by the defendant on 2 February 1998 as its Education Officer. He was on probation until 24 July 1998 when he was "permanently appointed" to that position. His letter of engagement was in the following terms:

I write on behalf of the Executive of PNG Communication Workers Union to advise of our Board's decision of your appointment to the position of Education Officer of the Union.

Your permanent appointment will take effect on the 24th July 1998 and remuneration of your appointment will apply the fortnight after.

Your career prospects will continuously be assessed together with discipline should there be cases of such.

Meanwhile we congratulate you on the positive assessment of your performance undertaken by our senior officer during your probationary period and hope your appointment will bring added success to the PNG Communication Workers Union.

12. That letter was signed on behalf of Emmanuel Kairu, the defendant's General Secretary.

13. The defendant did not record the terms and the conditions of the plaintiff's employment. There was no formal written contract entered into at any time.

14. The evidence does not make clear what his annual salary was when he was initially engaged. He has given evidence that at some time (probably at the date of termination) his benefits and allowances included the following:

15. The plaintiff has given evidence that it was the practice of the defendant to pass on to its employees increased salaries and other benefits that were obtained by members of the defendant union. There was no evidence to contradict that statement by the plaintiff and therefore I find that his claims in that regard are correct.

16. In 2001 the defendant entered into an enterprise agreement with Telikom PNG Limited. The agreement was registered with the Industrial Registrar. Incorporated into the enterprise agreement was a specific set of terms and conditions called the "Enterprise Redundancy Agreement". This agreement established a redundancy monitoring committee and defined what a "redundancy situation" was. It provided for Telikom PNG Ltd to give notice to the parties to the agreement of any impending situation six months prior to issuing a notice of termination of employment for redundancy. It made provision for retraining and redeployment of employees who had been made redundant. It requires Telikom PNG Ltd to give four months notice of termination (either actually or by paying MILON) to a permanent employee declared redundant.

17. Section 35 of the agreement provided for redundancy compensation. It stated:

The purpose of this section is to provide an equitable measure of compensation for eligible employees, whose employment has been terminated by the Company for redundancies. Special consideration has been given to those employees with long service, since they may experience difficulty in obtaining suitable new employment.

(a) An ordinary pay subject to Subsection 32(b) until the date of termination of his services; and

(c) Telikom PNG Ltd shall grant to all permanent employees covered under this agreement who have served in Telikom PNG for not less than twelve (12) months but less than ten (10) years, immediately before the effective date of retrenchment, pro-rata furlough, to be calculated at the following rates:

Twelve (12) days on full pay, in respect of each completed year of continuous service.

(d) An employee who is covered under this Agreement and who has completed at least ten (10) years of continuous service, shall be entitled to furlough credits also to be calculated at twelve (12) days on full pay in respect of each completed year of continuous service.

(e) Money in lieu of notice, which shall be payment for any of the un-expired portion of the notice period determined under Section 32 if applicable; and

(f) Repatriation fares for the officer and his family to the home district of the employee. Unless transport is provided by the employer repatriation travel shall be by the most direct route unless otherwise authorised by the company for reasons of economy, and travel shall be public transport; and

(g) It is agreed, the ex-gratia payment shall be determined under the ex-gratia computation (Table 1) under Section 36 Forced Redundancy.

18. Section 36 of the agreement provided for calculation of a "redundancy ex-gratia payment". For example, an employee who had completed four years of service would receive an ex-gratia payment equal to 76 days of salary.

19. There was also provision for a settling-out allowance of K2,500.00 for a married redundant employee and for repatriation of freight for the redundant employees personal effects of up to 400 kg.

20. On 9 September 2002, after being an employee of the defendant for four years, seven months and one week, the plaintiff commenced six weeks recreation leave. He went for a conference in Hong Kong. While he was on recreation leave he was given a termination notice in the following terms:

RE TERMINATION OF EMPLOYMENT NOTICE, BASED ON ORGANISATIONAL RESTRUCTURE AND ABOLITION OF TRAINING & EDUCATION FUNCTIONS

My Executive have decided to remove the office of the Education Officer from the Union Secretariat Structure.

We have noted that this function has remained dormant, for a long time and therefore could not be allowed to remain in its current form. The National Executives have recognized that lack of finance may have been a restrictive factor in stagnating the activities of the Training Unit, therefore we have deemed it necessary to suspend indefinitely the functions.

With this decision I regret to advise that your services can no longer be sustained in the new Structure arrangements and as such the Education Officer position [has become] redundant.

Accordingly you are hereby given (1) month notice that your services are terminated as of this date.

The Union will deduct all other financial debts owed to CESS, Kina Finance etc, including outstanding monetary advances obtained under the previous Union managements.

We thank you for the services rendered since your engagement with our Union, and wish you all the best in your future endeavours.

21. The plaintiff apparently accepted his termination without quarrel. The only dispute was about the amount of his finish pay. He engaged Poro Lawyers to negotiate with the defendant on his behalf but the negotiations came to nought and the present proceedings were commenced on 2 May 2003.

22. Contracts of employment in Papua New Guinea are regulated by the Employment Act Chapter No 373. It distinguishes between oral contracts and written contracts of employment.

23. Section 15 (record of terms, etc, of employment) is an important provision regarding oral contracts. It states:

(1) Where an employer and an employee enter into an oral contract of service, the employer shall, at the time of the engagement, make a written record of the terms and conditions of the contract.

(2) Where a dispute arises as to the terms and conditions of an oral contract of service, and the employer fails to produce a record under Subsection (1), a statement by the employee as to the terms and conditions of the contract shall be conclusive evidence of those terms and conditions unless the employer satisfies the Secretary or an Arbitration Tribunal established under the Industrial Relations Act 1962 to the contrary.

24. Division 3.6 (termination of contracts) of the Employment Act contains Section 33 to 39 and prescribes the circumstances in which a contract of employment can be terminated, the circumstances in which notice of termination has to be given, how much notice has to be given and in what circumstances notice does not have to be given.

25. Section 34 (notice of termination) is the provision relied on by the defendant to give a notice to the plaintiff in the present case. Section 34 states:

(1) This section does not apply to a written contract of service for the first two years of operation of the contract unless the parties to the contract agree otherwise.

(2) Subject to this Act, a party to a contract of service may, at any time, give notice to the other party of his intention to terminate the contract.

(3) The length of notice of intention required to terminate a contract of service shall be the same for both parties and—

(4) Where there is no provision in a contract of service for notice of intention to terminate, the length of the notice shall be not less than—

(a) one day's notice if the employee has been employed for less than four weeks; or

(b) one week's notice if the employee has been employed for not less than four weeks and for less than one year; or

(c) two weeks' notice if the employee has been employed for not less than one year and for less than five years; or

(d) four weeks' notice if the employee has been employed for five years or more.

(a) in the case of a contract of service referred to in Section 19(a)— in writing; and

(b) in the case of any other contract of service—either orally or in writing,

and the day on which the notice is given shall be included in the period of notice.

26. Section 36 (grounds for termination of contract) was the provision on which the plaintiff placed a lot of reliance at the trial. It states:

(1) An employer may terminate a contract of service without notice or payment instead of notice—

(ii) misconducts himself by an act of omission or commission that is inconsistent with the due and faithful discharge of his duties; or

(vi) is continually absent from his employment without leave or reasonable excuse; or

(vii) is convicted of an offence or contravention of this Act or any other law relating to employment; or

(b) on any other ground on which he would be entitled to terminate the contract without notice at common law.

(a) if the employer or a person acting or purporting to act on his behalf or by his authority—

(i) induced him to enter into the contract by force, fraud or a statement that was misleading in any material particular relating to the employment; or

(ii) has been convicted of an offence against or a contravention of this Act or any other law relating to the employee or his dependants; or

(iii) has been negligent or careless in the discharge of his duties towards the employee or his dependants under the contract, this Act or any other law; or

(iv) has committed an act of omission or commission that is inconsistent with the due and faithful discharge of his obligations towards the employee or his dependants; or

(b) on any other ground on which he would be entitled to terminate the contract without notice at common law.

(3) Termination of a contract of service under Subsection (1) or (2) shall be made as soon as practicable after the happening of the event on which the termination is based.

(4) This Act does not prevent termination of a contract of service under this section being the subject of an industrial dispute under the Industrial Relations Act 1962.

27. The plaintiff has framed his case as an action for breach of contract. The first thing for the court to do is verify that there was a contract and identify its nature and its terms and conditions. Then the question will become whether the redundancy and retrenchment provisions of the enterprise agreement formed part of the contract between the plaintiff and the defendant. What is the significance of the fact that the plaintiff was not a member of the union? Does that mean that he cannot enjoy any of the benefits of the enterprise agreement? Having determined what the terms and conditions of the contract were, the next question will be whether they were breached. If they were, the plaintiff will sustain his cause of action and be entitled to damages, the amount of which will be assessed by the court. If there was no breach of contract are there some other entitlements accruing to the plaintiff under the Employment Act?

29. Mr Furigi, for the plaintiff, concedes that there was no written contract of employment between the plaintiff and the defendant. There was no express agreement that the plaintiff would enjoy the benefit of the same sort of redundancy and retrenchment entitlements payable under the Telikom enterprise agreement of 2001. He nonetheless submitted that the enterprise agreement is a relevant point of reference. This is because the Employment Act does not provide for employees who have been redundant. The Employment Act gives various grounds for termination of a contract of employment but redundancy is not one of them The Act is silent on the issue of redundancy. There is a gap in the law, and the court should develop the underlying law to cater for the situation the plaintiff is in. It is through the process of developing the underlying law that the court should infer that one of the implied terms and conditions of the plaintiff's employment is that he is entitled to the same sort of redundancy and retrenchment entitlements Telikom employees enjoy under the enterprise agreement.

30. In addition the plaintiff should be awarded damages of at least K10,000.00 to compensate him for the distress, frustration, hardship and anxiety caused by the defendant's failure to pay him his entitlements when they were due.

31. Mr Siminzi, for the defendant, submitted that the plaintiff's claim was fundamentally misconceived as he was trying to claim benefits under an enterprise agreement to which he was not a party. The plaintiff was precluded from relying on the enterprise agreement as the source of his purported entitlements by the doctrine of privity of contract. The plaintiff cannot sue under the enterprise agreement as he was not privy – he was not a party – to that agreement. The doctrine of privity of contract is a key component of the law of contract which has been adopted as part of the underlying law of Papua New Guinea (PNGBC v Burra Amevo [1998] PNGLR 240, National Court, Sevua J).

32. The plaintiff was not at any stage a financial member of the union so he had no right, legal or moral, to the benefits of the enterprise agreement. Only financial members of the defendant union, who paid 2% of their salary as union dues, could benefit. The enterprise agreement is a registered industrial award and the beneficiaries are only financial members of the union pursuant to the Industrial Relations Act.

33. Mr Siminzi took issue with Mr Furigi's submission that the Employment Act was silent on the question of redundancy. Redundancy situations are provided for by Section 33 (termination of contracts), which states:

(1) A contract of service for a specified time or for specified work shall, unless terminated otherwise under this Division, terminate when the period of time for which the contract was made expires, or the work specified in the contract is completed.

(2) A contract of service for an unspecified period of time shall be deemed to continue until terminated by either party under this Division.

34. It was not necessary for the court to develop any principle of the underlying law as it was clear what the plaintiff's entitlements were limited to. The court would be departing radically from established principles of contract law were it to uphold the plaintiff's claims.

35. As to the issue of damages, Mr Siminzi asserted that if the court finds that the plaintiff does have a cause of action, he should be denied general damages as he has failed to mitigate his losses. Except for K2,000.00 the plaintiff flatly refused to accept the entitlements which the defendant tried to pay to him upon termination. Special damages have not been the subject of any evidence and therefore should not be awarded.

FIRST MAJOR ISSUE: WHAT WAS THE NATURE OF THE CONTRACT BETWEEN THE PLAINTIFF AND THE DEFENDANT?

36. This an important issue to address if for no other reason then to underline the point that the arrangement that existed between the plaintiff and defendant was a contractual relationship. Even though there was no formal written contract of employment there was a contract of service as defined by Section 1 of the Employment Act, which states:

"contract of service" means any agreement, whether oral or in writing, expressed or implied, by which one person agrees to employ another person as an employee and that other person agrees to serve his employer as an employee.

37. The scheme of the Employment Act is that a contract of service is either an oral contract or a written contract. There is no in-between. If a contract fails to meet the requirements of Section 19 (written contract of employment) it will by definition be an oral contract. (Brendel v Golden Square Pty Ltd [1983] PNGLR 257, National Court, McDermott J.)

(i) he has signed the instrument of agreement and has certified under his hand on the agreement that he has read, understood and agreed to abide by the terms and conditions endorsed on the agreement; and

(ii) the employer has endorsed on the agreement a note that he believes and is satisfied that—

the instrument of agreement in the presence of a labour officer and the labour officer certifies that Section 23 has been complied with.

40. Its terms and conditions were capable of being either expressed or implied. Most of them were implied. This is evident from the letter from Emmanuel Kairu to the plaintiff of 10 July 1998 confirming the "permanent appointment" of the plaintiff. It said nothing about salary or other terms and conditions. The defendant's failure to specify the terms and conditions of the plaintiff's engagement is significant. It amounts to a breach of two provisions of the Employment Act, Section 14 and Section 15(1).

Where an employer, an employment agent or worker-recruiter employs or seeks to employ a person he shall inform that person of the terms and conditions of the employment, including—

(b) the name of the place or places of employment at or on which he is to be or may be employed; and

(h) the manner of paying wages including the arrangements proposed in respect of refundable deductions (if any).

42. Section 15(1), cited earlier in this judgment, obliges the employer at the time of engagement to make a written record of the terms and conditions of the contract. It is very significant so I will restate it:

Where an employer and an employee enter into an oral contract of service, the employer shall, at the time of the engagement, make a written record of the terms and conditions of the contract.

43. It is not an offence for an employer to breach Section 14 or Section 15(1). But the failure to comply with Section 15(1) does have and in this case clearly has significant consequences under Section 15(2), which I also restate:

Where a dispute arises as to the terms and conditions of an oral contract of service, and the employer fails to produce a record under Subsection (1), a statement by the employee as to the terms and conditions of the contract shall be conclusive evidence of those terms and conditions unless the employer satisfies the Secretary or an Arbitration Tribunal established under the Industrial Relations Act 1962 to the contrary. [Emphasis added.]

44. Section 15(2) provides a way of resolving any dispute about what the terms and conditions of a particular oral contract are. If the employer cannot produce a record of the terms and conditions under Section 15(1), the employee's statement as to what the terms and conditions were becomes conclusive evidence unless the employer is able to satisfy the Secretary or an arbitration tribunal to the contrary.

45. Surprisingly Section 15(2), which I regard as critical to resolution of the present case, was given little or no attention by both counsel. The conditions in which Section 15(2) operates need to be precisely stated. They are:

46. If all of those four conditions are satisfied, the employee's statement shall be conclusive evidence of the terms and conditions of the oral contract.

47. At first glance all of the elements of or pre-conditions to operation of Section 15(2) apply in this case. First a dispute arose upon termination of the contract as to its terms and conditions and has continued to the trial. Secondly, the employer, the defendant, has failed to produce any record under Section 15(1) of the terms and conditions of the contract at engagement. Thirdly, the employee has made a statement as to the terms and conditions of the contract as he understood them. This statement appears in his affidavit. Fourthly, there is no evidence that the defendant has satisfied the Secretary or an arbitration tribunal that the terms and conditions of the contract are other than those stated by the plaintiff.

48. The purpose of Section 15 was explained by Kandakasi J in Peter Kirin and KK Farmers v John Paroda (2004) N2599: to achieve certainty in the terms and conditions of a person's employment in informal contracts. The section imposes obligations on the employer and provides that if those obligations are not discharged, what the employee says his or her terms and conditions of employment were becomes conclusive evidence of them.

49. I would qualify some of the words in Section 15(2) by requiring that the employee's statement as to the terms and conditions of the contract should be reasonable. If an employee were to state that it formed part of the terms and conditions of employment that upon termination he or she would be entitled to an all expenses paid around the world trip and K1 million in cash the statement would be too outlandish or fanciful to be accepted. The employee's statement needs to be able pass some test of sensibility or reasonableness. The terms and conditions which the employee states must not be so unreasonable that no reasonable person could believe that they were actually implied conditions of employment.

50. Applying those qualifications to this case I have come to the conclusion that what the plaintiff has stated as to his terms and conditions passes the test of reasonableness. The plaintiff has given uncontroverted evidence that he and other employees of the defendant obtained spin-off benefits from improvements in the terms and conditions of union members. His view was and remains that he was partly responsible for the union members getting better terms and conditions. It was only natural and fair therefore that he would get better conditions too. It was only natural and fair, he believed, that if union members were guaranteed certain entitlements upon a redundancy situation being declared, then he and the other union employees would get similar entitlements if ever they were made redundant. I do not think that this is an outlandish or unreasonable proposition. It seems that the plaintiff had been given the legitimate expectation that that would be the case in view of the practice that had developed in his period of employment.

51. In leaning towards a conclusion that favours the plaintiff I am not disregarding the careful and considered arguments by Mr Siminzi which emphasised that the plaintiff was never a party to the enterprise agreement. He was not a member of the union. That much is clear. He had no automatic right to the redundancy and retrenchment benefits prescribed by the agreement. However he legitimately believed that he was entitled to equivalent benefits and the defendant did nothing, on the evidence available, to disabuse him of that belief. The defendant left itself vulnerable to the implication of such terms and conditions into the plaintiff's contract by its failure to make a written record of the terms and conditions of the contract at the time the plaintiff was engaged. It could have counteracted the position of jeopardy which it had by its failure to comply with the Act put itself in, by entering into a written contract with the plaintiff and other union employees to clarify the terms and conditions of their engagement. It failed to do this. It remained in breach of Section 15(1) of the Employment Act. Its position of vulnerability remained. It also failed to avail itself of the procedures set out in the final element of Section 15(2) (ie satisfying the Secretary for Labour and Employment or an arbitration tribunal of the contrary view).

52. I conclude that the redundancy and retrenchment provisions of the 2001 enterprise agreement between Telikom PNG Limited and the defendant formed part of the terms and conditions of the contract of service between the plaintiff and the defendant.

53. Yes. The defendant failed to make payments to the plaintiff in accordance with the redundancy and retrenchment provisions of the enterprise agreement.

54. The plaintiff claims damages in two categories: unpaid entitlements calculated by reference to the redundancy and retrenchment provisions of the 2001 enterprise agreement and general damages for distress and frustration.

55. Paragraph 9 of the statement of claim particularised the plaintiff's calculation of what is owed to him. His affidavit (exhibit A) supports those particulars, as do the provisions of the enterprise agreement (in evidence as annexure D to exhibit D1, the affidavit of Emmanuel Kairu, the defendant's General Secretary). The particulars take into account deductions and expenses that need to be made and the part-payment of K2,000.00 already made by the defendant. The defendant has presented no evidence to counter the plaintiff's claim. I will therefore uphold it subject to the caveat that it is not appropriate for the court to take into account income tax and loan deductions for which the plaintiff is or may be personally liable. Those are matters for the plaintiff to sort out with the respective creditors. I will, however, take account of the K2,000.00 that was paid to the plaintiff by the defendant soon after the date of termination. I will therefore make an award of special damages comprising:

56. As to general damages there is evidence of inconvenience and hardship of the plaintiff and his family as a result of the defendant's failure to pay entitlements which he genuinely believed were due to him. He has claimed the sum of K10,000.00 and I do not think this is unreasonable. I have accepted the evidence that the periods since the date of termination has been a difficult and stressful time for the plaintiff and his family and that they have been greatly inconvenienced as a result of what has been found to be by these proceedings a breach of the contract on the part of his former employer. I will award general damages of K10,000.00.

FIFTH MAJOR ISSUE: WHAT OTHER ENTITLEMENTS, IF ANY, DOES THE PLAINTIFF HAVE UNDER THE EMPLOYMENT ACT?

57. In light of the resolution of the previous issues, it is unnecessary to address this issue other than to say that I am not persuaded that there are any gaps in the Employment Act that would warrant the court developing the underlying law. I thought Mr Furigi's argument based on Section 36 was without merit.

58. The Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52 is the governing law. Section 1 (interest on certain debts and damages) is the appropriate provision. It states:

(1) Subject to Section 2, in proceedings in a court for the recovery of a debt or damages the court may order that there be included in the sum for which judgment is given interest, at such rate as it thinks proper, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.

(2) Where the proceedings referred to in Subsection (1) are taken against the State, the rate of any interest under that subsection shall not exceed 8% yearly.

59. As Bredmeyer J pointed out in Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24, this section confers a four-fold discretion on the Judge: (1) whether to grant interest at all; (2) to fix the rate; (3) to grant interest on the whole or part of the debt or damages for which judgment has been given; and (4) to fix the period for which interest will run.

1 A plaintiff should in the normal course of events receive interest. There is nothing that takes this case out of the ordinary in that regard. Interest will be included in the sum for which judgment is given.

2 The standard rate of interest being used these days by the courts is 8%. It has been decided in some cases that awards of special damages should attract interest at only half of the proper rate (eg Pinzger v Bougainville Copper Ltd [1983] PNGLR 436, National Court, Bredmeyer J; approved on appeal in Pinzger v Bougainville Copper Ltd [1985] PNGLR 160, Supreme Court, Pratt J, Amet J, Woods J). I will follow that approach.

3 Interest should be payable on the total of the pre-judgment components, if any, of the various categories of damages that have been assessed. The governing principle is that interest is not intended to be compensation but an award of money paid to the plaintiff for being kept out of money that ought to have been paid to him. If a head of damage is compensation for future losses it will not attract any interest. I identify the pre-judgment and post-judgment components of the categories of damages in the following table.

The following amounts of damages will attract interest: special damages (K22,319.71) and general damages (K5,000.00).

61. I calculate the amount of interest by applying, in relation to each category of damages attracting interest, the following formula:

62. I will order that there be included in the sum for which judgment is given, interest of K4,283.50.

63. The general rule is that costs follow the event, ie the successful party has its costs paid for by the losing party on a party-to-party basis. There is no reason apparent to depart from that rule here.

Judgment accordingly.
_____________________________
Poro Lawyers: Lawyers for the Plaintiff
Gubon Lawyers: Lawyers for the Defendants

Pro-rata furlough leave	K 4,040.00
Ex-gratia	6,396.73
4 months MILON	6,231.98
Housing allowance	1,305.00
Repatriation costs	6,271.00
Medicare reimbursement	75.00
Part-payment	(2,000.00)
	K 22,319.71

No	Category	Pre-judgment (K)	Post-judgment (K)	Total (K)
1	Special damages	22,319.71	0	22,319.71
2	General damages	5,000.00	5,000.00	10,000.00
Total		27,319.71	5,000.00	32,319.71

National Court of Papua New Guinea

Baboa v PNG Communication Workers Union [2006] PGNC 196; N3043 (31 March 2006)