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Wairo v Quest Exploration Drilling (PNG) Ltd [2014] PGNC 127; N5720 (9 September 2014)

N5720

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

WS NO 711 OF 2013

DOMINIC WAIRO
Plaintiff

V

QUEST EXPLORATION DRILLING (PNG) LTD
Defendant

Madang: Cannings J
2014: 25 April, 11 July, 9 September

LAW OF EMPLOYMENT – wrongful dismissal – whether employer breached written contract of employment by failing to give one month notice in writing; by failing to provide right to be heard.

The plaintiff's employment with the defendant was terminated by the defendant one year and nine months after he and the defendant entered into a two-year written contract of employment. The plaintiff sued the defendant, claiming damages for breach of contract. The plaintiff argued that the defendant breached the contract by not complying with its constitutional duty to accord him natural justice, by not adhering to the termination provisions of the contract and by not paying him his correct final entitlements.

Held:

(1) The defendant was not obliged to give the plaintiff a right to be heard prior to terminating the contract, there being no term of the contract conferring that right and no right under the Constitution or the underlying law (New Britain Palm Oil Limited and Others v Vitus Sukuramu (2008) SC946 applied).

(2) The defendant breached the contract by not giving one month's written notice under clause 14 of the contract or a notice of termination under clause 15 of the contract, and by not paying the plaintiff the correct amount of final entitlements.

(3) The plaintiff established a cause of action in breach of contract. The proceedings shall continue, subject to any agreement by the parties to the contrary, to a trial on assessment of damages and unpaid entitlements.

Cases cited

The following cases are cited in the judgment:

George Podas v Divine Word University (2011) N4395
Timothy Con v Jant Ltd (2014) N5503
Vitus Sukuramu v New Britain Palm Oil Limited and Others (2007) N3124

TRIAL

This was a trial on liability for breach of a contract of employment.

Counsel

T M Ilaisa, for the Plaintiff
S Kesno, for the Defendant

9th September, 2014

1. CANNINGS J: The issue in this case is whether the defendant, Quest Exploration Drilling (PNG) Ltd, is liable in breach of contract to a former employee, the plaintiff, Dominic Wairo.

2. The plaintiff, a driller by profession, commenced employment with the defendant on 1 June 2007. He was employed under a succession of written contracts. The last one was signed on 10 December 2010. It was a two-year contract, commencing on 1 January 2011. The defendant terminated the plaintiff's employment in October-November 2012. The exact date is contentious.

3. The plaintiff argues that the defendant breached the contract by not complying with its constitutional duty to accord him natural justice, by not adhering to the termination provisions of the contract and by not paying him his correct final entitlements. He seeks damages. The defendant denies liability. It argues that it was under no obligation to comply with the principles of natural justice, that the plaintiff's employment was terminated in accordance with the contract and that the correct entitlements were paid to and accepted by the plaintiff. The issues are:

1. Did the defendant breach its duty to comply with the principles of natural justice?
   
2. Did the defendant breach the contract by not adhering to its termination provisions?
   
3. Did the defendant fail to pay the plaintiff his correct entitlements?
   
4. What orders should the court make?
   
1. DID THE DEFENDANT BREACH ITS DUTY TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE?
   

4. No. The defendant was not obliged to give the plaintiff a right to be heard prior to terminating the contract, there being no term of the contract conferring that right and no right under the Constitution or the underlying law (New Britain Palm Oil Limited and Others v Vitus Sukuramu (2008) SC946 applied).

2. DID THE DEFENDANT BREACH THE CONTRACT BY NOT ADHERING TO THE TERMINATION PROVISIONS OF THE CONTRACT?
   

5. This is the critical issue and before resolving it, it is necessary to make some findings of fact. For this purpose I have considered two affidavits that have been admitted into evidence. The first is by the plaintiff, which was sworn and filed on 25 November 2013 (exhibit P1). The other is by the defendant's human resources manager, John Kalu, sworn on 27 February 2014 and filed on 3 March 2014 (exhibit D2). The train of events portrayed in the two affidavits is similar.

Events

6. I find that the following events occurred:

• During 2012 the plaintiff was living in Madang but working for the defendant in Western Province, based at Tabubil, as the defendant's operations were connected to exploration and mining activities of Ok Tedi Mining Ltd.
  
• The plaintiff's contract provided, in clauses 9 and 10, for "field breaks". The plaintiff's work schedule was based on 28 days in the field working seven days a week for a minimum of 12 hours each day, followed by a field break of 14 days. He was entitled to a return airfare to his point of hire, Madang, on "completion of each field rotation".
  
• In late September 2012 the plaintiff went on a field break to Madang and he returned to Tabubil to resume duty on 8 October 2012.
  
• On 9 October 2012 the plaintiff's field manager, without explanation, gave the plaintiff a plane ticket back to Madang. He asked his field manager and other managers why he was being sent back to Madang so soon but no one could say why, except to say that it was an instruction from the defendant's then Human Resources Manager, Ms Susie Wilmot.
  
• The plaintiff returned to Madang, as instructed, on 9 October 2012. He was confused about what was happening so he rang Ms Wilmot, who told him that he was terminated. She did not, however, say why he was being terminated.
  
• On 12 October 2012 Ms Wilmot sent a letter of that date, from the defendant's head office in Lae, by registered post, to the plaintiff in Madang, which was received soon afterwards. The letter stated:
  

Dear Dominic

I refer to clause 14 of your contract of employment between yourself and Quest Exploration Drilling (PNG) Ltd.

Due to the current downturn in work for the company, it is necessary to stand you down.

Your stand down period is up to and including 9 November 2012.

If after a period of 28 days you are still on stand-down, the Company will have to terminate your services and the period of the stand-down will be considered as your terminated notice period.

Yours sincerely

Susie Wilmot

PNG HR Manager

• No further written communication was given to the plaintiff except for a three-page document containing a series of calculations of his final entitlements, calculated to 9 November 2011, totalling K7,691.37.
  
• That amount was paid into his bank account on or about 26 November 2012.
  

The contract

7. There are two significant clauses in the plaintiff's contract of employment, 14, and 15, which must be quoted verbatim:

14 TERMINATION

This agreement may be terminated by the provision of at least one month's written notice by both parties. Payment or part-payment in lieu of notice may be provided by the Employer.

When the employee fails to give one month's notice of resignation, up to one month's salary will be deducted from the employee's final pay.

This agreement may be terminated at any time by mutual agreement of both parties.

This agreement may be terminated by the Employer for breach of the Employer's rules and regulations by the Employee.

This agreement could be terminated should it be shown that the Employee does not possess the skills and ability necessary to fulfil his duties at the time of employment. This agreement may be terminated by the employer if the Employee abandons his duties. The Employer considers abandonment as failure to return to work at the nominated time, without first notifying the Employer.

15 STAND DOWN

Should circumstances arise whereby the volume of contract work is insufficient to maintain the Employee's services, the Employee will be stood down for a period of up to 28 days.

At the commencement of the stand down period the employee will be given 'Notice of Termination' and remain available for work for the following 28 days.

If during the stand down period the volume of work increases and the Employee's services are once again required, the termination process is cancelled.

If after 28 days the Employee is still on stand down, the employee will be terminated.

Interpretation

8. I find that the combined effect of clauses 14 and 15 is that the following procedure should have been followed by the defendant in the event of an actual stand-down of the plaintiff:

• At the commencement of the stand-down period the defendant must by virtue of clause 15, give the plaintiff a notice of termination, which must (by inference) be a written notice, explaining that the plaintiff will be stood down for 28 days and must remain available for work for the following 28 days.
  
• If during the stand-down period of 28 days the volume of work increases and the plaintiff's services are one again required the defendant must under clause 15 notify the plaintiff that the termination process is cancelled and (by inference) notify him when he is to resume duty.
  
• If after 28 days of the stand-down period the plaintiff is still on stand-down, the defendant is entitled to terminate the plaintiff. This can only properly be effected if the defendant: (a) notifies the plaintiff, in accordance with the 'notice of termination' given at the commencement of the stand-down period, that he is actually terminated on the date of the notice; or (b) the defendant gives one month's notice in writing of his termination, in which case one month's pay in lieu of notice may be paid.
  

Were the procedures followed?

9. No. I find that the procedures were breached by the defendant, in that:

• The defendant did not give the plaintiff a 'notice of termination' at the commencement of the stand-down period, 9 October 2012. He was not given written notice of any description until three or four days later, when Ms Wilmot's letter of 12 October 2012 was sent to him by registered post.
  
• Ms Wilmot's letter of 12 October 2012 was not a 'notice of termination' as required by clause 15. It was a misleading and ineffective document, in that: (a) it referred to clause 14 of the contract, when it should have referred to clause 15, (b) it did not state that the plaintiff was to remain available for work for the period of the stand-down.
  
• The defendant did not at the end of the stand-down period, 9 November 2012: (a) notify the plaintiff that was actually terminated on any particular date, or (b) give the plaintiff one month's notice in writing of his termination, or (c) pay the plaintiff one month's pay in lieu of notice.
  

10. In reaching the conclusion that the termination provisions of the contract were breached, I make the comment that this is not a case of flagrant violation of the contract by an employer. I consider that the defendant made a genuine attempt to comply, but mistakes were made in the process. As I have indicated in other wrongful dismissal cases such as George Podas v Divine Word University (2011) N4395 and Timothy Con v Jant Ltd (2014) N5503, the termination of a person's contract of employment is a serious matter, and if the contract has termination provisions contained in it, those provisions and the procedures they provide for must be strictly interpreted and enforced.

What are the consequences of failure to comply?

11. The procedures set out above arise from the Court's interpretation of the written contract. They are tantamount to being terms (or requirements) of the contract. Those terms were breached by the defendant. The consequence is that the plaintiff has established a cause of action in breach of contract and that the defendant is liable in damages.

3. DID THE DEFENDANT FAIL TO PAY THE PLAINTIFF HIS CORRECT ENTITLEMENTS?
   

12. The plaintiff's final entitlements appear to have been calculated on the presumption that his contract of employment was terminated in accordance with the contract. I have just determined that as a matter of law, that was not the case. The inevitable conclusion is that the plaintiff has not been paid his correct entitlements.

4 WHAT ORDERS OR DECLARATIONS SHOULD THE COURT MAKE?

13. I will declare that the plaintiff has established a cause of action in breach of contract. The proceedings will continue, subject to any agreement by the parties to the contrary, to a trial on assessment of damages and unpaid entitlements. I have considered referring all remaining areas of dispute, including orders that would determine the proceedings and the costs of the proceedings, to mediation under Rule 5(2) of the ADR Rules. However, I consider that with appropriate directions being given to the parties, this case will reach a speedier resolution by having a trial on assessment of damages.

ORDER

(1) It is declared that the plaintiff has established a cause of action in breach of contract in that the defendant failed to comply with the termination and stand-down clauses of the contact of employment and pay the correct final entitlements to the plaintiff.

(2) The proceedings shall continue, subject to any agreement by the parties, to a trial on assessment of damages and unpaid entitlements, the assessment of such sums to be determined in accordance with the above declaration of liability.

(3) The defendant shall pay the plaintiff's costs of the proceedings to date, on a party-party basis, which shall if not agreed be taxed.

Judgment accordingly.
__________________________________________________________
Thomas More Ilaisa Lawyers: Lawyers for the plaintiff
Warner Shand Lawyers: Lawyers for the defendant