N3408

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1711 OF 2005

BETWEEN:

JOSEPH CHARLIE
Plaintiff

AND:

DR. THOMAS WEBSTER as DIRECTOR
OF THE NATIONAL RESEARCH INSTITUTE
First Defendant

AND:

THE NATIONAL RESEARCH INSTITUTE
Second Defendant

Waigani: Davani .J
2008:	 28th May
27th June

CONTRACT OF EMPLOYMENT – Probationary period – termination whilst on probation – unsatisfactory performance – employer not liable.

CONTRACT OF EMPLOYMENT – termination clause - meaning – not to call extrinsic evidence – words speak for themselves – unsatisfactory performance proven on evidence.

CONTRACT OF EMPLOYMENT – Employee on probation – no security of employment - claim for damages to be based on probation period only.

Facts

The plaintiff was employed by the second defendant on a three (3) year contract. He was placed on six (6) months probation. He took leave and overstayed the leave, done without the first and second defendants’ approval. His conduct was found to be unsatisfactory and that it breached his conditions of probation. He was terminated with payment of three (3) months in lieu of notice.

Held

1.	That an employee on probation does not have security of employment;

2.	When terminated whilst on probation, the measure of damages is related to the probationary period as specified in the Contract;

3.	In considering a claim for breach of contract, the Court cannot substitute its own view of the evidence, all it can do is determine whether there was before the Heads of Departments and Council, evidence that would constitute misconduct under the terms of the Contract.

Cases cited

Beck v. Atlas Hire [1984] PNGLR 158;
Rooney v. Forest Industries Council [1990] PNGLR 407;
Sulaiman v. PNG University of Technology (1987) N610;
Tau Gulu v. PNG Defence Force Savings and Loan Society Ltd N1399;
Curtain Brothers (Queensland) Pty Ltd and Kinhill Kramer Pty Ltd v. The State [1993] PNGLR 28;
Odata Ltd v. Ambusa Copra Oil Mill Ltd (2001) N2106;
Misima Mines Ltd v. The Collector of Customs (2007) N3206;
Joe Naguwean v. The Independent State of Papua New Guinea [1992] PNGLR 367;
Matrus Mel v. Highlands Regional Secretary Incorporated (1995) N1289;
Michael Kandiu v. ANZ Banking Group (PNG) Ltd (2002) N2226.

Counsel:

I. Mugugia, for the plaintiff
G. Tamade, for the defendant

DECISION

27 June, 2008

1. DAVANI .J: The matter proceeded to hearing on liability and quantum, where the plaintiff, a former employee of the second defendant, the National Research Institute (NRI), is suing the NRI for wrongful dismissal and damages arising from that wrongful dismissal.

Plaintiff’s Evidence

2. The plaintiff’s evidence is contained in his own affidavit; sworn on 20th June, 2007 and filed on 21st June, 2007, which is that;.

a).	He was employed on a contract of employment as a Maintenance Supervisor with NRI for the period 12th July, 2004 to 12th June, 2007.

b).	He applied for and obtained compassionate leave for ten (10) days in December, 2004, to attend to personal matters in Gurney, Milne Bay Province. This was later changed to recreation leave which was approved, for a period of fifteen (15) days.

c).	His initial application for compassionate leave was approved by NRI’s Administration Manager, Mr. Stanislova Motolova and later changed to recreation leave and approved by Mr. Jim Robbins, the NRI’s Publishing Manager.

d).	Although his leave was to have ended on or about 7th January, 2005, due to bad weather, he did not return to Port Moresby until 17th February, 2005, two (2) weeks later.

e).	He said that whilst in Alotau, because he was not paid his leave entitlements, he called NRI requesting that his wages be sent to him in Alotau. This was not done. He sought funds from relatives to purchase his return ticket to Port Moresby on 17th February, 2005.

f).	He resumed duties on 18th February, 2005, then reported to the first defendant and explained the reasons for his absence from work.

g).	On 7th March, 2007, the first defendant informed him that he will institute an inquiry to investigate the matter. He was suspended from duty with full pay effective as of 9th March, 2005.

h).	On 1st April, 2005, the first defendant requested that the plaintiff provide him reasons for his absence from work. This was done by the plaintiffs letter of 5th April, 2005, followed by another letter of 18th April, 2005.

i).	He was served with a Notice of Termination dated 19th July, 2005 on 25th July, 2005

j).	The plaintiff states that he was not reprimanded pursuant to sections 8.5.3(1) and (2) of the Terms and Conditions of Employment and that therefore, he was unlawfully terminated.

The defendants’ evidence

3. The affidavit of James Robbins sworn on 16th July, 2007 and filed on 19th July, 2007 states that;

a)	He is the Head of the Publishing Division with NRI and regularly acts in an administrative capacity. This includes authorizing leave requests from employees.

b)	He states that the plaintiff was employed by NRI within the relevant period and that his contract of employment was for a period of three years.

c)	That the plaintiff applied for compassionate leave for ten (10) days which was granted.

d)	As NRI had approved institutional leave for the Christmas vacation from 24th December, 2004 to 3rd January, 2005, the plaintiff’s leave would overlap. The plaintiff was encouraged to take recreational leave as the reasons given for compassionate leave were not for death or emergencies as intended.

e)	The plaintiff never informed NRI that he would be out of Port Moresby because arrangements could have been made to appoint an Acting Maintenance Supervisor in his absence, because this was a senior position.

4. Affidavit of Dr. Thomas Webster sworn on 16th July, 2007 and filed on 19th July, 2007 which states, amongst others that;

a) 	The plaintiff is a former employee of NRI.

b) 	In January, 2005, he found out that the plaintiff was not at work and was in Alotau. He then requested the Admin Manager to explain why this was so because the plaintiff held a senior position with NRI and was still on probation.

c) 	By letter of 18th February, 2005, the plaintiff provided an explanation to the first defendant for his reasons for absence from work.

d) 	By letter of 7th March, 2005, the first defendant advised the plaintiff that he will convene an inquiry into the plaintiff’s absence, then indefinitely suspended the plaintiff.

e) 	Additionally, on two other occasions, he had requested the plaintiff to provide him his reasons for being absent from work.

f) 	The first defendant also sent memos to NRI’s Mr. Robbins and Mr. Motolova asking who had authorized and approved the plaintiff’s leave requests.

g) 	The plaintiffs reasons to the first defendant for being absent from work were that due to bad weather in Milne Bay, he could not travel to Alotau from his village, to return to Port Moresby so had to ask relatives to pay his return travel expenses to Port Moresby.

h) 	On 27th April, 2005, the first defendant requested the NRI’s Admin Manager to provide a report on the plaintiff’s probation.

i) 	After the first defendant’s investigations, he presented a report to the Heads of Divisions of NRI and recommended that the plaintiff be terminated after his probation period.

j) 	On 17th May, 2005, the NRI Heads of divisions met and agreed with the first defendants recommendation to terminate and further agreed that their decision should be referred to the NRI Council for its determination.

k) 	On 15th July, 2005, the NRI Council at its meeting No.3 of 2005 noted the Head of Divisional Head’s recommendation to terminate the plaintiff, agreed with that recommendation and terminated him.

l) 	By letter of 19th July, 2005, the first defendant issued a letter of termination to the plaintiff, terminating him from the NRI’s employ with three months pay in lieu of notice.

Issues

5. Both counsel agreed on certain issues for determination by this Court. I will not set them out because it is not necessary to do so.

6. But in relating the pleaded grounds of termination to the evidence, the issues obviously are;

i.	Did the defendants breach clauses 8.5.3 (1) (2) (3) of the General Terms and Conditions?
ii.	Did the defendants breach clause 9.3.2 of the General Terms and Conditions?

Analysis of evidence and the law

7. The plaintiffs Writ of Summons and Statement of claim filed on 4.11.05, pleads that he was wrongfully terminated on 19th July, 2005.

8. He relies on a National Staff Employment Agreement (‘Employment Agreement’) entered into between the second defendant and him on 12th July, 2004. This agreement refers to the General Terms and Conditions of Employment for Contract Citizen and Non Citizen staff of the National Research Institute (‘General Terms and Conditions’) which together form the plaintiffs Contract of Employment with the defendant. (the ‘Contract’).

9. Under the Employment agreement, the plaintiffs services was acquired in accordance with S.23(1) of the National Research Institute Act chap. 165 (‘NRI Act’) which relates to the appointment of staff.

10. It is necessary that I set out the particulars of wrongful termination as taken from the plaintiff’s Writ of Summons and Statement of Claim.

"15. Particulars of wrongful termination 

i. 	The plaintiff took approved leave from 15th December, 2004 to 7th January, 2005 and was not absent without approval as is alleged by the first defendant in his letter of termination dated 19th July, 2005.

ii. 	That unsatisfactory performance relied on as a ground for termination was not part of the terms of reference in the initial domestic inquiry and therefore the first defendant wrongfully allowed that ground to add weight to the termination so as to justify his cause of action to terminate the plaintiff.

iii. 	The plaintiff was not given an opportunity to make a reply to the allegations of unsatisfactory performance as that ground was not part of the terms of reference in the domestic enquiry thus denying the plaintiff the rights of natural justice to be heard in his defence.

iv. 	That the plaintiff was not charged pursuant to section 8.5.3(3) of the terms and conditions of employment and further he was not given an opportunity to appeal to the Council against his termination.

v. 	The first defendant did not produce evidence of unsatisfactory performance like warning letters, reprimand letters, sanctions etc to justify his actions for terminating the plaintiff on the ground for unsatisfactory performance.

vi. 	The first defendant terminated the plaintiff when he did not have the powers to do so except the NRI Council and that the Council did not deliberate on his termination.

vii. 	Failing to give the plaintiff three (3) months notice pursuant to the terms and conditions of employment."

11. The particulars of Salary and Entitlements claimed are pleaded in the Writ of Summons and Statement of Claim and are as follows:

"…

16. 	As at the date of the termination, the plaintiff served out only one (1) year of the Contract of Employment leaving a balance of 2 years contract outstanding.

17. 	By reason of the first defendant’s wrongful termination as aforesaid, the plaintiff has suffered loss of salary and entitlements and incentives provided in the contract that he would have earned for the 2 years balance of the contract had the Contract of Employment not been summarily terminated.

18. 	Particulars of salary and entitlements;

Loss of salary from 20th October, 2005 to 12th June, 2007

1.	20th October, 2005 to 31st December, 2005 – 5 f/n x 
K844.38 per f/n=K4,221.93

2.	2006 – 26 fortnights x K21,954.00

3.	1st January, 2007 – 12th June, 2007 = 11 fortnights x K844.38 = K9,288.23

4.	DMA – K1,500.00 pa x 3 years (2005, 2006, 2007) – K4,500.00

5.	Recreation Leave pay (x 2 years) = K6,854.00

6.	Recreation leave fares (2x adults & 2 x chn, Pom Gur Pom = K3,388.00 (2005 Air Niugini air fares)

7.	Repatriation allowance = K3,000.00

8.	Housing allowance @ K7.00 f/n x 57 f/n = K399.00

9.	Gratuity 25% of gross salary (K5,488.50 x 3 years) = K16,465.50)

And the plaintiff claims:

K70,570.66.

Damages for wrongful termination.

Special damages.

Interest.

Costs. "

12. Liability – The common law principle that the employer may terminate the services of an employee at will (i.e at anytime and for any reason or for none) applies in Papua New Guinea 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 ch. 273. It is then, purely, a master and servant relationship.

13. The rights of the plaintiff lie at law by way of action for wrongful dismissal, assuming the dismissal to be unlawful. There is also no automatic right to continuous employment or damages for early termination in Contracts of employment that are not for a fixed term. (Beck v. Atlas Hire [1984] PNGLR 158; Rooney v. Forest Industries Council [1990] PNGLR 407; Sulaiman v. PNG University of Technology (1987) N610). Whether the termination is a breach of contract or to be classified as a wrongful dismissal is dependent on whether there were facts in existence on which to base such a decision. The Court in considering a claim for breach of contract, cannot substitute its own view of that evidence, all it can do is determine whether there was before the Board evidence which if accepted, would constitute misconduct under the terms of the Contract. In Tau Gulu v. PNG Defence Force Savings and Loan Society Ltd N1399 dated 28.12.95, Sheehan .J held that on the evidence, serious complaints were made of the plaintiffs conduct. Investigations were carried out during which the plaintiff was given opportunity to respond to allegations made, and did so. The report of the investigation including the plaintiffs reply was put before the board and considered. His honour held;

" This Court in considering the claim for breach of contract cannot substitute its own view of that evidence, all that it can do is determine whether there was before the Board evidence which if accepted, would constitute misconduct under the terms of the Contract. I am satisfied that that was the case and that it was open to (sic) Board to come to the conclusion that it did. In the circumstances, the plaintiffs claim is dismissed." (my emphasis).

14. As to the meaning to be given to or the construction of words used by the parties, Chitty on Contracts, 24th Edition, states at pgs 700 to 701;

" the object of all construction of the terms of a written agreement is to discover these from the intention of the parties to the agreement… The cardinal presumption is that the parties have intended what they have in fact said, so that their words must be construed as they stand. That is to say, the meaning of the document or of a particular part of it is to be sought in the document itself. "One must consider the meaning of the words used, not what one may guess to be the intention of the parties".

15. Therefore, the law has developed to the stage where the calling of extrinsic evidence to show what it was that the parties agreed to is not followed. Generally, the Courts will let the words employed by the parties in the contract speak without the need for calling extrinsic evidence. (Curtain Brothers (Queensland) Pty Ltd and Kinhill Kramer Pty Ltd v. The State [1993] PNGLR 285; Odata Ltd v. Ambusa Copra Oil Mill Ltd (2001) N2106; Misima Mines Ltd v. The Collector of Customs (2007) N3206.

16. The plaintiff pleads that he was employed on a Contract of employment. In his Writ of Summons and Statement of Claim, the plaintiff refers to a "written agreement of 12th July, 2004" (par. 4 of Statement of Claim) and "terms and conditions of employment" (par. 10 of statement of Claim). This is supported by his evidence i.e his affidavit sworn on 20th June, 2007 and filed on 21st June, 2007 to which is attached the "General Terms and Conditions of Employment for Contract Citizen and Non-Citizen Staff of the National Research Institute", and which documents I refer to respectively as the Employment Agreement, the General Terms and Conditions and to be both referred to as the Contract.

17. The plaintiff claims that the process leading to termination as set out in the Contract were breached which is the basis of the wrongful termination claim. As pleaded in the Writ of Summons and Statement of Claim, these are;

	Provision in General Terms and Conditions	Ground	
1.	Clause 8.5.3 (1) (2) (3) 	That the first defendant did not reprimand the plaintiff; he did not charge the plaintiff; he did not refer the plaintiff to the NRI Council; the plaintiff did not have the opportunity to appeal to the NRI Council
	
2.	Clause 9.3.2	That the first defendant did not give the plaintiff three (3) months notice prior to termination.

18. The relevant provision in the Contract governing the discipline of the NRI’s employees is clause 8 of the General Terms and Conditions which consists of clause 8.1 through to clause 8.10. I will only set out clause 8.5.3 (1) (2) (3) as that is pleaded in the statement of claim. It reads;

" 8.5	DOMESTIC ENQUIRY AND CHARGE

8.5.1. 	Where the Director takes cognizance of an act of misconduct under Clause 
8.3.1 (1), or receives a written report under Clause 8.4.1 or Clause 8.5.2, he/she may call upon the employee for an explanation.

8.5.2. 	If in his/her opinion, the explanation by itself or after any domestic enquiry which he/she may have ordered is satisfactory, the Director may close the matter or report the matter to the Council

8.5.3. 	If in his/her opinion, the said explanation of the Employee is by itself unsatisfactory or, after domestic enquiry appears to be unsatisfactory the Director may:

(1). reprimand the Employee verbally and close the matter; or

(2). reprimand the Employee, close the matter and report to the Council; or

(3). charges, serve them on the Employee, institute an enquiry, and report the matter to the Council; or

(4).report matter to the Council."

19. The defendants must comply with the process in clause 8 of the General Terms and Conditions.

20. Damages - But another issue to be answered first before discussion of the two issues I raise is whether the plaintiff was on probation after execution of the Contract. If so, whether probation is a specific term of the Contract and whether the plaintiff is entitled to the sum of the damages that he claims.

21. Clause 2.4.1 of the General Terms and Conditions provides for "Probation" and states that "the first engagement of a person in the Institute shall be made on probation for a period of six months with effect from the date of the commencement of his/her employment".

22. It is not disputed that the plaintiff was only into 3 months of employment with the second defendant when he was terminated. Again I ask, can he sue for the balance of the contract i.e the 3 years he had not served, considering he was on probation when he was terminated?

23. Cases dealt with in this jurisdiction involving plaintiffs who were terminated whilst on probation are;

i.	Joe Naguwean v. The Independent State of Papua New Guinea [1992] PNGLR 367

ii.	Matrus Mel v. Highlands Regional Secretary Incorporated (1995) N1289 (dated 6.1.95).

24. In Joe Naguwean v. the State (supra), the plaintiff never took up the offered position although he was advised earlier, that he had won that position. On learning that the defendant had appointed another person, he sued. The Court dismissed his claim, holding amongst others, that if the plaintiff had commenced, the regulations governing his employment provided for a probationary period of 12 months. If he was terminated whilst on probation, the measure of damages would be related to the probationary period.

25. In Matrus Mel v. Highlands Regional Secretary Incorporated (supra), the plaintiff executed a contract of employment which provided for an agreement to employ the plaintiff for 3 years and a trial period of 3 months during which either party can withdraw on giving 2 months notice in writing. Ongoing negotiations regarding the plaintiffs housing resulted in the defendants employer withdrawing from the Contract as provided in Clause 2 of that Contract.

26. The Court referred to the Joe Naguwean case to assist it in the assessment of damages where it looked to the period in which the employer may be bound. It held that this was the probationary period and only this could be used as the basis for the damages claim.

27. The Court assessed damages at 3 months salary being the probationary period for the contract. Because he never commenced duties, there was no allowance for other entitlements which relate to actual performance at work. Judgment was ordered at 3 months salary K3562.50 and interest K805.80, a total of K4368.30.

28. Another case involving a similar fact situation is Michael Kandiu v. ANZ Banking Group (PNG) Ltd (2002) N2226 dated 23.4.02. In that case, I considered the same issue, where the plaintiff’s contract was terminated whilst he was on probation. I found that an employee on probation does not have the security of employment that a permanent employee would have and found the termination to be proper because the plaintiff had not performed to the employers (defendants) expectations during his period of probation.

29. Clause 9 of the General Terms and Conditions provides for termination of employment. It states at clause 9.1.2 (1) and (2) that; 

"9.1.2	The Institute may terminate the employment of an employee if:
the employee’s performance of duty is unsatisfactory during the probationary period;
the employee has committed serious misconduct;

…"

30. The basis of the plaintiffs termination is unsatisfactory performance during the probationary period as stated in the first defendants letter to the plaintiff dated 19th July 2005 attached as annexure ‘S’ to the first defendants affidavit, effectively, a termination under clause 9.1.2 of the General Terms and Conditions.

31. Clause 9.3 of the General Terms and Conditions provides for "Termination under clause 9.1.2". It states;

" 9.3	TERMINATION UNDER CLAUSE 9.1.2

9.3.1. 	Where the Institute terminates the services of an employee, the Institute shall follow such procedure, if any, as may be provided for in these Terms and Conditions, and the Employee shall be given an opportunity to be heard on the proposal to terminate his/her employment.

9.3.2 	The Institute may terminate the employment by giving three months notice of termination in writing to the Employee or paying him/her emoluments if, at any time during the period of probation, the Institute considers the Employee’s performance of his/her duties to be unsatisfactory.

9.3.3. 	Where the employment of an Employee is terminated under Clause 9.3.2 the Institute shall, subject to the provisions of these Terms and Conditions, pay the employee all such entitlements as are normally payable on commencement of employment and on termination of employment, after completion of the period of employment.

32. In relation to the defendants compliance or not with process under the General Terms and Conditions, the plaintiff gave an explanation to the first defendant dated 18th April, 2004 which explanation was then considered by the first defendants heads of departments, then the first defendants Council, done in compliance with process set out in clause 8.5 of the General Terms and Conditions. The determination at all these meetings was that the plaintiff had overstayed his recreational leave period with no explanation. Furthermore, because this occurred whilst he was on probation, that his performance was deemed to be unsatisfactory. His explanation that he put to the first defendants heads of departments, then the Council, was found to be without merit. All the Court can do is determine this, that there was evidence before the Heads of Departments and the Council to constitute misconduct. (see Tau Gulu v. PNG Defence Force (supra)). This was done in this case.

33. The Court should not call extrinsic evidence to assist in interpreting clause 8.5 of the General Terms and Conditions. The words therein speak for themselves.

34. Even if the Court found that the defendants did not comply with process under the General Terms and Conditions, the plaintiff would only be entitled to the payment as calculated under clause 9.3.2 of the General Terms and Conditions of Employment, i.e payments accrued and due to the plaintiff during the period of probation. The defendants informed the plaintiff of this by the first defendant’s letter to the plaintiff of 19th July, 2005.

35. I find that the first and second defendants have not erred in the process leading to the plaintiff’s termination. Therefore, I find the plaintiff has not made out a claim for wrongful dismissal. I will not make any awards either on liability or quantum.

36. It follows that the plaintiff shall pay the first and second defendants costs of the proceedings to be taxed if not agreed.

_______________________________

Wagambie Lawyers: Lawyer for the Plaintiff
Pacific Legal Group: Lawyer for the Defendants