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Taru v New Ireland Shipping Ltd [2008] PGNC 155; N3501 (24 October 2008)

N3501

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 657 OF 2004

BETWEEN

JOSES TARU
for and on behalf of himself and 28 Others of Paul Tohian
and Beaumarohis Vessels
Plaintiff

AND:

NEW IRELAND SHIPPING LIMITED
Defendant

Waigani: Kandakasi, J.
2006: 16 March and 16 May
2008: 24 October

DAMAGES – Assessment of – Relevant principles – Default judgment resolves all issues on liability but Court obliged to have cursory inquiring into pleadings to ensure a cause of action is pleaded - Damages allowable for actual and prospective loss but not too remote and not amounting to a penalty – Measure of damages be closer to restoring loss and damages as money can possibly.

EMPLOYMENT LAW – Unwritten contract of employment - Terms and conditions of – Employees claiming certain terms and conditions – Employer not disputing –Employer obliged to keep written record of terms and conditions of employment – Failure to – Effect of – Terms and conditions claimed by employer deemed the terms and conditions of employment - Employment Act s.15.

Cases Cited

Papua New Guinean Cases:

Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002) N2182
Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694
Titus Kagl by his next friend Boi Gabriel v Peter Baki, Secretary Department of Education and Department of Education and The Independent State of Papua New Guinea (2008) N3318.
William Mel v Coleman Pakalia, Commissioner of Police, The Independent State of Papua New Guinea (2005) SC790
Motor Vehicles Insurance Limited v. Maki Kol (28/11/07) SC902, (per Kandakasi, Lenalia and David JJ)
Anton Johan Pinzger v. Bougainville Copper Ltd [1985] PNGLR 160
Dillingham Corporation of New Guinea Pty Ltd v. Constantino Alfredo Diaz [1975] PNGLR 262
Australia and New Zealand [ANZ] Banking Group (PNG) Ltd v Kila Wari (1990) N801
MVIT v Pupune [1993] PNGLR 370.
Wilson Thompson v. National Capital District Commission and The City Manager (2004) N2686.
Rooney v Forest Industries Council of PNG & Anor [1990] PNGLR 407
Curtain Brothers (QLD) Pty Ltd & Kinhill Kramer Pty Ltd v. The Independent State of Papua New Guinea [1993] PNGLR 285.

Overseas Cases:

Eddis & Anor v. Chichester Constable & Ors [1969] 2 All ER 912

Counsel:

N.K Magela, for the Plaintiffs
No Appearance for the Defendants

24th October, 2008

1. KANDAKASI J: New Ireland Shipping Limited employed Mr. Joses Taru and 28 of its other former employees. In early 2003, the company ran into some serious financial difficulties making it difficult for it to pay its former employees their fortnightly salaries and other entitlements. The former employees continued to render their services to the company until it became difficult for them to continue to do so without receiving their salaries and other entitlements. Consequently, the former employees left their respective employments and subsequently issued these proceedings seeking a recovery of their unpaid salaries and other entitlements. The company did not take any step to defend the proceedings. That resulted in the Court signing default judgment against the company with damages to be assessed. Eventually, the matter came before me for assessment of damages, under several heads of damages.

2. The questions for the Court to determine are these:

(a) Are the former employees entitled to unpaid fortnightly salaries and their other heads of damages?

(b) Did the former employees suffer the damages they say they suffered?

(c) If the former employees did suffer damages, what are their damages?

3. A determination of the first question will determine the necessity to consider and determine the second and third questions. Similarly, a determination of the second question will determine the necessity of considering the third question. Hence, we will consider and determine each of the questions in the order in which they are stated.

Relevant Principles on Assessment of Damages

4. Before turning specifically to the issues, I remind myself of the principles on assessment of damages. In the case of Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority,[1] I summarized and set the principles governing the assessment of damages following the entry of a default judgment. The Supreme Court endorsed that summation in the case of Papua New Guinea Banking Corporation v Jeff Tole.[2] These principles say in summary that, the entry of default judgment resolves all questions of liability in relation to the matters pleaded in the statement of claim on the basis of which the default judgment has been entered. The only exception to that is only in respect of anything that goes into the jurisdiction of the Court to entertain the matter at the first place as I noted in the case of Titus Kagl by his next friend Boi Gabriel v Peter Baki, Secretary Department of Education and Department of Education and The Independent State of Papua New Guinea.[3]

5. In its subsequent decision, the Supreme Court in William Mel v Coleman Pakalia, Commissioner of Police, The Independent State of Papua New Guinea,[4] added an additional point. There, the Court said a trial judge in an assessment of damages hearing should make a cursory inquiry on liability only to be satisfied that, there is in fact a cause of action clearly pleaded for which default judgment has been entered in order to be satisfied that liability has been properly proven. If such an inquiry reveals no cause of action or the matters pleaded make no sense, proceeding to an assessment of the damages would be a futile exercise. Therefore, the judge should inquire further and revisit the issue of liability.

6. The principles enunciated in the above cases are not in derogation but in addition to well accepted principles at common law which have been adopted into our jurisdiction. The principles thus adopted and applying in our jurisdiction are these:

(a) One’s measure of damages "should as nearly as possible... that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation";[5]

(b) However the measure of one’s damages should not include any damages or loss that is remote;[6]

(c) Damages may be awarded for the prospective as well as the actual loss incurred by a breach of contract. Although damages are in many cases difficult to ascertain, an attempt must nevertheless be made to assess them;[7]

(d) There may be cases in which the contract may provide for a sum payable as damages in a case of a breach of one or more of its terms but such an agreement may not be upheld unless it can be demonstrated as a reasonable and genuine pre-estimated of one’s loss or damages;[8]

(e) In some cases, damages may be recovered for inconvenience and mental distress resulting from the breach of contract;[9] and

(f) Finally, the law requires a plaintiff to take all reasonable steps to mitigate his loss failing which part of his damages may be reduced.[10]

7. Taking these principles as my guide, I will now address the specific issues raised in these proceedings, starting with the first issue first.

Are the former employees entitled to their claims for unpaid salaries and other heads of damages?

8. Turning firstly then to the first question, I note that, what damages an unlawfully dismissed employee is entitled to, is dependant on the nature and terms of his employment contract with his or her former employer. Where the contract is in writing, it is almost exclusively to the particular terms of the contract the law turns to, to ascertain the precise terms and conditions of one’s employment.[11] In the case of unwritten or oral contracts, section 15 of the Employment Act[12] requires an employer to "make a written record of the terms and conditions of the contract" and produce them when a dispute on the terms and conditions of one’s employment arises. Where an employer fails to meet these requirements, the same provision provides that:

"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 to the contrary."

9. In the present case, as we have seen, the former employees filed and served these proceedings on the company, making their respective claims for damages. As earlier noted, the company did not say or do anything in response. That caused the signing of default judgment against it. The Court then listed the matter for hearing for an assessment of the former employees’ damages. In support of their respective claims, the former employees filed and served their respective affidavits on the Company. Even that did not attract any response from the Company and the assessment of damages proceeded without the company’s participation in any manner or form. That happened on the Court’s satisfaction that, there was a cause of action sufficiently pleaded with appropriate particulars of the former employee’s losses or damages.

10. In each of the former employees’ affidavits, they say when each of them commenced their respective employments with the company. They also talk about their respective terms and conditions of their employment. Their affidavits clearly reveal that, they were employed as various seamen from Masters to cooks or general duties personnel on two ships namely "MV Paul Tohian" and "MV Beaumaris". The company owned both of these vessels. Both vessels had various and serious problems. Consequently, MV Paul Tohian anchored in Madang for over nine (9) months for required survey and other repair work from 22nd April 2003, while MV Beaumaris anchored at Rabaul waiting for her survey and repair work yet to be carried out due to the company facing serious financial difficulties. During these times, the plaintiffs did not receive their fortnightly salaries and other allowances, a problem they had commenced to experience sometime earlier on. Food and other rations on the vessels ran out and the plaintiffs’ were forced to fend for themselves. This unsatisfactory situation seriously affected some of the former employees’ marriages with one or two of them breaking down and children affected due to an inability of the concerned former employee’s inability to meet their financial obligations. The situation became far more unbearable and most of the former employees were forced to leave their respective employments.

11. In the absence of any evidence to the contrary, and in particular, no contest from the company with records of each of the former employee’s employment in any manner or form, in terms of the fact of the former employee’s employment with the company and the terms and conditions of their employment, I accept the terms and conditions the former employees have put forward on basis of both the facts as placed before me and the law as per section 15 of the Employment Act. On the strength of the law and the facts as noted, I find that, each of the plaintiffs where entitled to salaries or wages, hardship, housing, leave and stevedoring allowances as well as pro-rata on the rates they are claiming. The fact that liability has been resolved in favour of the former employees, confirm the former employees’ entitlement to the various heads of damages, they are claiming against the company.

Did the former employees suffer the damages they say they suffered?

12. As I noted in the foregoing, each of the former employees’ affidavit evidence, speak respectively of each of their damages. Their evidence confirm that each of them suffered damages in terms of unpaid fortnightly salaries or wages, and the other allowances they claim they are entitled to and are due and owing to them from the company. There is neither any argument against the former employee’s claims, nor is there any evidence in rebuttal of their evidence. Accordingly, I have no hesitation in finding that the former employees did suffer the kind of damages they each claim they suffered. They are thus entitled to claim the damages they are claiming against the company. The question for the Court to resolve is how much is each of the former employees’ damages. That is the subject of the remaining main question for me to resolve.

What are the former employees’ damages?

13 Each of the former employees has given a calculation of their respective losses in their respective affidavits. I find their calculations reasonable in addition to what I have already stated, on the basis of which I accept each of their claims. I also find that, the former employees have taken steps to mitigate their loss and damages as and when they were able to. Proceeding on that basis, I find and accept the following damages under the headings of unpaid fortnightly salaries (S), individual allowances (IA), housing allowance (HA), hardship allowance (HSA), pro-rata entitlement (PRE) and accrued annual leaves (AAL):

14. On the basis of what has now been established, judgment is signed for the former employees in the total amount of K427, 956.38. That will be with interest at 8 percent from the date of the issue of the writ to the date of judgment. Costs shall follow the event.

____________________________________

Lomai & Lomai Lawyers and Attorneys: Lawyers for the Plaintiffs
No appearance: For the Defendants.

^[1] (2002) N2182.
^[2] (2002) SC694.
^[3] (2008) N3318.
^[4] (2005) SC790.
^[5] Motor Vehicles Insurance Limited v. Maki Kol (28/11/07) SC902, (per Kandakasi, Lenalia and David JJ).
^[6] Motor Vehicles Insurance Ltd v. Sanage Kuri (02/03/06) SC825, (Injia DCJ, Gavara-Nanu J, Lay J)
^[7] Anton Johan Pinzger v. Bougainville Copper Ltd [1985] PNGLR 160 (per Pratt , Amet and Woods JJ); Dillingham Corporation of New Guinea Pty Ltd v. Constantino Alfredo Diaz [1975] PNGLR 262 (per Frost CJ, Prentice DCJ, Raine J);
^[8] Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694 (per Amet CJ, Sheehan and Kandakasi JJ)
^[9] Australia nd New Zealand [ANZ] Banking Group (PNG) Ltd v Kila Wari (1990) N801 (per Salika AJ as he then was).
^[10] MVIT v Pupune [1993] PNGLR 370; Wilson Thompson v. National Capital District Commission and The City Manager (2004) N2686 (per Kandakasi J) and Rooney v. Forest Industries Council of PNG & Anor[1990]PNGLR 407.
^[11] See Curtain Brothers (QLD) Pty Ltd & Kinhill Kramer Pty Ltd v. The Independent State of Papua New Guinea [1993] PNGLR 285 and the many cases that follow it for support for this proposition and its application.
^[12] Revised Laws Chapter 373