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Darragh Kayumu [2015] PGNC 167; N6068 (22 September 2015)
N6068
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
CIA NO. 160 OF 2013
BETWEEN:
ROBERT BOB DARRAGH
First Applicant
AND:
DARRAGH'S WELDING AND STEEL CONSTRUCTION LIMITED
Second Applicant
AND:
ROMAN KAYUMU
Respondent
Kokopo: Higgins, J.
2015: 9th June, 19th August, 8th & 22nd September
APPEAL FROM DISTRICT COURT - application to set aside ex parte judgment – decision to refuse application defective – good
defence on the merits – long delay explained – wrongful dismissal lies only against employer – whether dismissal
for cause open.
Cases Cited:
Papua New Guinean Cases
Barker v. The Government of PNG [1976] PNGLR 340
Green & Company Ltd v. Green [1976] PNGLR 73, 77
Greene v. Greene [1976] PNGLR 73
Koroguen v. Wagen [2008] PGNC 108
Lambu v. Torato [2008] PGSC 34
Murphy v. Mundell [1969] PGSC 56
Paraka v. Kava [2000] PNGNC 40
Page P/L v. Malipu Bus Balakau [1982] PNGLR 140
Porgera Joint Venture v. Kami [2010] PGSC 11
Putput Logging v. Ambalis [1992] PNGLR 159, 164
Rainbow Holdings P/L v. Central Province Forest Industries P/L (Per Liq Apptd) [1983] PNGLR 34, 40
Tolanas v. Gipe [2008] PGNC 179
Overseas Cases
Bowmakers Ltd v. Barnet Instruments Ltd [1945] 1KB 65
Blunden v. Commonwealth of Australia [2000] FCA 1581
Brisbane South Regional Health Authority v. Taylor [1996] HCA 25; (1996) 186 CLR 541
Stefek v. Garnama Pty Ltd [2014] ACTSC 140
Counsel:
Mr. Robert Asa, for the Applicants
Mr. Wesley Donald, for the Respondent
DECISION
22nd September, 2015
- HIGGINS, J: On 14 July 2008 the respondent, Roman Kayumu, filed a summons in the District Court at Rabaul. That summons instituted proceedings
by Mr. Kayumu against the applicants for unlawful dismissal.
- It recited that the respondent had been employed by "the defendant" for the last 12 years. He, therefore, sought "entitlements" consequent
upon the termination of his employment.
- Those entitlements he particularised as follows:
- Backdated Pay
| K1,920.00 |
- Damages for unlawful termination
| K2,080.00 |
- General Damages
| K4,500.00 |
- Punitive Damages
| K1,000.00 |
- Costs
| K 500.00 |
- Any other orders as the Court deems fit.
|
|
- In the Statement of Claim, it was alleged that the second applicant was incorporated and carried on the business of selling fuel and
related items under the name "Darragh's Mobil Center Point". The respondent was employed as a "fuel regulator".
- At the outset it is apparent that the second applicant was wrongly described in the title to the proceedings. It is a limited company.
That was an error of form and easily corrected. I have, with the consent of the parties, duly amended the description of the second
applicant. However, that brings into sharp relief the status of the first applicant. He is alleged to have been, with the second
applicant, the employer of the respondent.
- It is inherently unlikely that the two applicants would be the respondent's employer. Rather, it is highly likely that the second
applicant was the employer; being a company owned, and no doubt controlled, by the first applicant.
- The Statement of Claim recited that "no reasonable opportunity was afforded to the Plaintiff to response (sic) to the alleged and false allegations brought against him".
- Those allegations are somewhat confusingly referred to in the next paragraph.
"6. As a result of the false allegations, threats were leveled (sic) against the complainant, and the complainant's good name and
repute had been tarnished after almost 12 years of his employment with the Defendants, his name had not been defamed".
- I think the allegation was intended to convey that the respondent was defamed after 12 years of good repute as an employee of the
applicants by reason of the "false allegations".
- Those allegations were particularised as follows:
"(a) Suspicious (sic) of me being a thief.
(b) Threats were levelled (sic) against the complainant that if he does not admit to committing the alleged offence then he would
be taken to the old Rabaul airport (Matupit) and whilst the defendant (sic) will stand guard and the Policemen will severely assault
the complainant.
(c) Complainant was involved with the Islands Petroleum Limited (IPL) in their evil acts of stealing fuel and re-selling for personal
benefits without the knowledge of their employees".
- That last allegation is plainly confused. It is more likely that it was allegedly suggested to the respondent that he and employees
of IPL were involved in stealing fuel without the knowledge of that company.
- The next paragraph recites that:
"On the 19th November 2007, the Defendants unlawfully terminated the Plaintiff (sic) on suspicion of illegal dealings in the embezzlement
of 300 litres of diesel fuel, which the Plaintiff denies."
- The wrongfulness of the termination of employment was particularised as arising from the following:
"(a) No notice of suspension or warning letter not (sic) given before terminated.
(b) No reasonable opportunity afforded to the complainant to respond to the false allegations of misconduct in the performance of
his duties of employment given to the complainant.
(c) Refusal by the defendant (sic – which defendant?) to take into account the complainant's valid reasons against his termination.
(d) Proper employment ethics and regulations under the Employment Act have not been complied (sic) before terminating the complainant."
- Presumably the latter particular was intended to be a reference to the Employment Act 1978 (PNG). It may be a reference to s.17:
"Each party to an oral contract of service that expires under Section 16 (end of wages period) shall, immediately on the expiration of the contract, be deemed to have entered into a new oral contract
of service for a further period of the same duration and subject to the same terms and conditions as the expired contract unless
–
(b) the contract has been summarily terminated by either party for lawful cause".
- Otherwise, under s.34(4) of that Act, the respondent, after 12 years of employment, if that was the fact, would be entitled to 4 weeks notice or payment in lieu. Indeed,
5 years service would suffice.
- Under s.36(1) of the Act, complicity in theft of fuel from the employer would be lawful cause for instant dismissal without notice or payment in lieu of notice.
- The applicants engaged Mr. Kevin Latu of Latu Lawyers to appear on their behalf to defend the claim.
- Unfortunately, Mr. Latu was in poor health and did not attend to the matter as diligently as he might otherwise have done. That is
referred to in an affidavit of Mr. Darragh, the first applicant, sworn 2 August 2013. To compound the problem, Mr. Darragh was himself
in poor health and needed to go to Australia for specialist treatment. While he was away in Australia, apparently from October 2008
to at least mid-2009, the matter, first listed for hearing on 3 November 2008, was heard and determined in his absence. Counsel for
the applicants did not attend either so a judgment was entered ex parte in favour of the respondent.
- I have now received the District Court file. Copies have been given to the parties. It does record that the first appearance was on
23 September 2008 before Magistrate Linge at Rabaul. The applicants appeared, the first applicant being personally present. The first
applicant told Magistrate Linge that the matter would be defended, that the respondent had not been "terminated" and that investigations
into alleged fraud by the respondent were pending.
- On 23rd October 2008, the first applicant sent a request for adjournment of the hearing date and a copy of his medical report to the
Court in support of that request.
- On 3 November 2008, there was no appearance for the applicants. The respondent sought an adjournment to enable his lawyer to attend.
The matter was adjourned to 13 November 2008. On that day there was again no appearance for the applicants. The respondent again
sought an adjournment for his lawyer to attend. The matter was adjourned to 10 December 2008.
- On that day, Mr. Latu appeared for the applicants. The respondent appeared in person. Directions were given for a defence to be filed
by 17 December 2008. The matter was adjourned to 19 December 2008.
- On 17 December 2008, a defence, dated 12 December 2008, was filed. It raised the point that the respondent was employed by the second
applicant only and had been summarily terminated as a result of allegations of stealing fuel and that investigations by police were
pending.
- On 18 December 2008, Mr. Latu wrote to the Court requesting that the matter stand down to 1:30pm on 19 December 2008 due to a clash
with another matter he had in Kokopo at 9am the same day.
- On 19 December 2008 at 10am, the respondent appeared in person. There was no appearance for the applicants. The respondent sought
that a date for hearing be fixed after his lawyer returned from Christmas vacation. 18 March 2009 at 10am was fixed accordingly.
- On that date, Mr. Kadai appeared for the respondent. The applicants did not appear. His Worship further adjourned the matter to 30
March 2009 at 10am, indicating that if there was no appearance by the applicants, the matter would proceed ex parte. Counsel was
to notify the applicants, presumably through Mr. Latu.
- On 30 March 2009, Mr. Kadai appeared but there was no appearance by or for the applicants. Mr. Kadai sought default judgment for the
respondent.
- That application was refused on the ground that the claim was not suitable for default judgment not being for a liquidated sum. His
Worship noted that it called
"... for argument on the legality or illegality of the plaintiffs' termination. Therefore under such circumstances Court must go into
substantive (illegible)".
- The note then records that Mr. Kadai intended to proceed by affidavit evidence. That affidavit was directed to be filed by 10 April
2009. Decision on liability was fixed for 17 April 2009 at 10am.
- On that date the respondent appeared in person. There was no appearance by or for the applicants. The respondent advised the court
that matter was "not ready". It was adjourned to 24 April 2009 at 10am.
- On 24 April 2009, Mr. Kadai appeared for the respondent. Again the applicants were not represented.
- The note of the proceedings on that date states:
"Being on (?) uncontested evidence of
plaintiff deft is found liable.Judgement is entered for the plaintiff in
the sum of K5000-"
- There was no affidavit tendered as his Worship had directed. What the "uncontested evidence" was is not clear. Indeed, having been
given copies of the District Court file, neither Mr. Asa nor Mr. Donald could find any record of any evidence being given by the
respondent to enable the assessment of damages.
- Presumably, the plaintiff was found to have been dismissed without cause. Prima facie he was entitled to 4 weeks pay in lieu of notice.
The sum of K5000.00 seems somewhat arbitrary. It appears that damages should have been limited to 4 weeks pay in lieu of notice unless
the contract of employment was found to have provided a greater entitlement. There was no reference to any evidence warranting that
conclusion and it seems unlikely that it would have been so.
See Porgera Joint Venture v. Kami [2010] PGSC 11.
- The Court Order, as taken out, was for K5, 750.00. Whilst that does not exceed the jurisdiction of the Court (see s.21 District Courts Act 1963 (PNG)) it does vary from the order actually made.
- It appears from the first applicant's affidavit that, on 15 November 2007, a prospective witness, Mr Mathias Sakete, had signed a
statement confessing that he and 5 other named employees of IPL had, together with "Roman (Bob Darragh staff)", stolen fuel, 200
litres at a time, when deliveries were made to the Service Station of Mr. Darragh's company. The reference to "Roman" was apparently
a reference to the respondent.
- On 14 December 2007, the alleged theft was reported to Kokopo CID and recorded by acting Police Station Commander, D.Yapu.
- As detailed in a letter of 22 February 2008 to the Department of Labour at Kokopo, the first applicant, as manager of the second applicant,
advised that the respondent:
"... was stood down, pending his investigation by the Ralum CID Fraud Squad, for stealing from our Service Station, by altering Customers
Credit Sheet and removing monies from the Service Station's takings".
- The investigation, he stated, was "finally now underway".
- It is not entirely clear how this relates to the diversion of fuel supplied by IPL, although the proposed defence and cross-claim
states:
"1. The Complainant whilst being employed as a transport officer by the Defendants, obtained fuel to the value exceeding K8,000.00,
the property of the Defendants between June and November 2007.
2. These (sic) fuel was not authorised by the Defendants to be removed from the fuel container truck as such the Complainant is liable
to the Defendants for the sum of K8,000.00".
- Again, the modus operandi of the conduct of the alleged conspirators is not entirely clear but that it wrongfully caused loss to the second applicant is plainly
implied.
- The first applicant asserts that he was unaware of what had happened in the District Court after he left for Australia and even after
his return to PNG until execution of the judgment was levied.
- It appears that, in 2012, the respondent made application for execution reciting in a statutory declaration that the first applicant
had been absent in Australia from 2009 but had now returned to his home in Kokopo. The respondent was, apparently, then living in
Eastern Highlands Province.
- As already noted, the Court Order in favour of the respondent is dated 30 April 2009 for K5, 750.00 and costs, signed by Mr. Linge,
Magistrate.
- The Warrant of Execution issued on the 4th July 2013 for K5, 900.00 including costs of K150.00.
- Property was seized on 12 July 2013. This certainly engaged the first applicant's attention.
- On 2 August 2013, the first applicant swore an affidavit, filed 26 September 2013, supporting an application, filed at the same time,
in the Rabaul District Court, seeking to set aside the ex parte order of 30 April 2009. An order was also sought to dismiss the first
applicant from the proceedings.
- The latter also deposed that the second applicant was no longer trading and had been deregistered in 2009. There is, presently, no
documentation to support this statement. However, if true, it would pose a considerable difficulty for the respondent. It also raises
questions as to whether the deregistration was lawfully done, given the then pending claim of the respondent.
- The grounds for removal of registration of a company are set out in s.366 Companies Act 1997 (PNG). The request for removal under s.366(1)(d) of that Act would have required satisfaction that the second respondent had:
"... discharged in full its liabilities to all its known creditors, ..."
(s.366(2)(a))
- If the second applicant had, indeed, been deregistered, s.377 or 378 would need to be activated to restore it to the register. The
Court may do so under s.379. Under s.380, restoration revives the company retrospectively.
- The affidavit further deposed that the respondent was knowingly concerned in the theft of fuel supplied by IPL to the second applicant.
- The first applicant further deposed that the respondent had been employed by the second applicant and not by him personally.
- A draft Defence was annexed. It is somewhat confused. It does clearly allege the previously particularised misconduct by the respondent
but then relies on "viotente non fit iniuria" (sic). No doubt "volente non fit iniuria" was intended to be cited. That is a reference to the defence of voluntary assumption of risk in the case of personal injury suffered
as a result of alleged negligence. The principle no doubt sought to be asserted is more appropriately represented by the maxim "ex turpi causa non oritur actio". (out of a wrongful cause no action lies). That is not really an appropriate defence either. It is not alleged that the contract
of employment was tainted by illegality. (See Murphy v. Mundell [1969] PGSC 56 such a defence pleaded to assault - "quite absurd"; volenti also pleaded; see Rainbow Holdings P/L v. Central Province Forest Industries P/L (Per Liq Apptd) [1983] PNGLR 34, 40 per McDermott, J.; for the correct application of the maxim – see Putput Logging v. Ambalis [1992] PNGLR 159, 164 ff per Sheehan, J.; Tolanas v. Gipe [2008] PGNC 179 per Gabi, J.)
- It further pleaded that, though the respondent was "laid off", he was not terminated and to award damages would be "unjust enrichment".
- Again, with due respect to the lawyers for the applicants, this was confusing. The first part is merely a play on words. The respondent
was, I was informed, stood down without pay as a result of the allegation of complicity in theft. That is a dismissal. It is a fundamental
breach of the contract of employment if wrongfully done.
- "Unjust enrichment" is an equitable principle requiring the repayment of monies or property given by mistake or otherwise so that
it ought, as a matter of justice, be refunded or surrendered unless the claimant for relief has to rely upon an illegal contract
(see Bowmakers Ltd v. Barnet Instruments Ltd [1945] 1KB 65). – see Putput Logging P/L v. Ambalis [1992] PNGLR 159, 165 per Sheehan, J.; Koroguen v. Wagen [2008] PGNC 108, per Cannings, J.).
- Notwithstanding the shoal of red herrings thus introduced, the applicants' defence was clear. The respondent was allegedly guilty
of egregious misconduct, stealing fuel, in concert with others, from his employer, the second applicant. The second applicant counter-claimed
for recovery of the value of the diverted fuel.
- The application came before Magistrate Oiveka on 18 October 2013. A written judgment dismissing the application was delivered on 15
November 2013. This appeal was lodged on 13 December 2013.
- In that decision, Magistrate Oiveka first referred to the principles governing an application to set aside a default judgment. Those
principles are equally applicable to the setting aside of an ex parte order.
- His Worship referred to Paraka v. Kava [2000] PNGNC 40 in which Hinchcliffe, J. decided that the rules required notice to a party of intention to apply for default judgment unless rule
19(2) applied. In this case, there was no evidence that any such warning was given. This is the more significant in the light of
the first applicant's known absence from the jurisdiction at the time and his reasons therefore. The judgment, therefore, could be
seen to have been irregularly entered, albeit that, in the result, default judgment was not entered. Rather, the matter was dealt
with ex parte. However, there is no evidence that the applicants were advised of the proposed ex parte hearing.
- Magistrate Oiveka does not explore that issue though he raises forewarning at par [4] of his decision.
- His Worship then, correctly, refers to Greene v. Greene [1976] PNGLR 73, Barker v. The Government of PNG [1976] PNGLR 340, Page P/L v. Malipu Bus Balakau [1982] PNGLR 140. To set aside an ex parte order requires evidence of a prima facie defence on the merits, a consideration of any prejudice flowing
from delay, the nature and extent of the delay and the reasons for it.
- In the latter case, Greville-Smith, J. refused an application to set aside a default judgment where there had been unreasonable delay and no evidence of a bona fide defence.
The delay itself, his Honour noted, would cast doubt on the bona fides of any defence had one been alleged.
- A question was raised in Lambu v. Torat [2008] PGSC 34 as to whether default judgment for damages to be assessed could be entered in a defamation case. Their Honours held that it could.
Such a judgment would, more correctly, be referred to as an interlocutory judgment. However, it does not seem that in the present
case defamation has been pursued as a separate cause of action rather it seems to have been a pleader's flourish in respect of the
claim for wrongful dismissal.
- Nevertheless, that case does highlight a further potential irregularity. Judgment was entered for K5, 750.00. How that sum was assessed
is not clear, particularly as judgment was ordered in the sum of K5, 000.00. Was the K750.00 for costs? It is unclear.
- It is also unclear from the Summons whether the action was truly for defamation, which might embrace the first applicant or merely
wrongful dismissal, which would embrace a cause of action only against the second applicant as the employer. As I have stated, the
latter seems more likely.
- His Worship first considered whether there had been shown to be a prima facie meritorious defence. At par [7] of his reasons he concluded:
"... I consider that the Applicant has shown by evidence that indeed he has a defence on merits and in the interest of justice, the
matter should be reinstated for hearing".
- Indeed, the defence filed by Mr. Latu went beyond the allegation of misconduct by the respondent, it raised a question as to whether,
as a matter of law, judgment could have been entered against the first applicant because he was not the employer. The Draft Defence,
annexure D to the first respondent's Affidavit in Support of the application to set aside the ex parte order of Magistrate Linge,
does not refer to the deregistration of the second applicant. Apart from the allegation of theft, it is otherwise somewhat confused.
- I have to say that the latest Company Extract, produced by Mr. Donald, for the respondent, does not support the alleged deregistration.
Nevertheless, the matter was raised in affidavit evidence by the applicants, as was the issue of the identity of the employer, even
if not reflected in the Draft Defence. Those issues were not addressed by his Worship. In fairness, the respondent was unlikely to
have referred to them.
- The learned Magistrate then addressed the question of delay, noting it was about 4 years since the order for judgment was made before
action was taken to set it aside.
- His Worship concluded:
"8. If indeed the complainant was at fault and the matter was pending criminal investigations, why wasn't the complainant charged?
It seems that there were no merits (sic) in that application raised by the defendants. At the same time, if the Court Order was served
to (sic) the defendants in 2009, why didn't they apply to set it aside promptly as indicated by the case law that I have cited?"
- On that basis, the application was dismissed with costs.
- The first applicant had already explained in his affidavit that the combination of his health, the death of Mr. Latu and the lack
of any notice of the judgment till execution was levied as the reason for his delay and, hence, that of the second applicant.
- It is true that the respondent claimed to have served the ex parte order in 2009. How that was done does not appear from the evidence
tendered before Magistrate Linge. What does appear is that enforcement was not attempted till July 2013. The respondent had deposed
that he delayed enforcement until he was aware that the first applicant was back in the country.
- The respondent had told his Worship, as the judgment recites, that he had served the ex parte orders on the "defendant" in 2009, before
the first applicant left for Australia. That is the only reference. It is not clear what, if anything, his Worship assumed as to
the mode of service. However, he did proceed as if it had been effected personally on the first applicant.
- As to that assertion, the first applicant denied being served. That denial was not expressly rejected by his Worship.
- What seemed to have swayed his Worship was the lack of police action to prosecute the respondent. He seems to have assumed that because
there had been no prosecution, despite the complaint made by the first applicant on behalf of the second applicant, that there was
no merit in the complaint. That was in apparent contradiction of his Worship's finding that the substantive defence proposed had
merit.
- To thus rely on inaction by police reveals impermissible reasoning. What reason the police had not to progress a prosecution was irrelevant
in the absence of any further evidence. It may be said that the first applicant failed to persist with the police. That does not,
however, imply that his complaint lacked bona fides or was merely a delaying tactic.
- It was not evidence of any lack of belief by the first applicant in the merits of the defence.
79A. There was no apparent consideration by his Worship of any prejudice suffered by the respondent because of the delay, though some
prejudice may be presumed from a lengthy delay.
79B. I agree with O'Leary AJ in Green & Company Ltd v. Green [1976] PNGLR 73, 77:
"It has been said that delay in moving to have a judgment set aside is not in itself important, unless it results in some prejudice
to the other party or it enables the rights of third parties to intervene: See Grimshaw v. Grimshaw ([1953] 1QB 408; 415), per Jenkins LJ. With respect, I agree that is so ... But there are cases where the delay is such that of itself
it must work a prejudice to the other party and where it would be an injustice to him to allow the case to be re-opened."
79C. That proposition was affirmed by the High Court of Australia in Brisbane South Regional Health Authority v. Taylor [1996] HCA 25; (1996) 186 CLR 541 per McHugh J.
79D. The essential principle applicable both to extension of time and setting aside default or ex parte orders is that, after weighing
up the factors for and against the grant of the relief sought, the Court is to be satisfied by the applicant that on the balance
of probabilities, it is just and reasonable to extend time or to set aside an ex parte order as the case may be. See also Blunden v. Commonwealth of Australia [2000] FCA 1581.
79E. The judgment to be made is a discretionary one. It must have regard to all relevant circumstances. These include but are not
limited to:
(a) the length of and reasons for the delay on the part of the applicant.
(b) the extent to which, having regard to the delay, there is or is likely to be prejudice to the respondent.
(c) the conduct of the respondent after the cause of action arose and the steps taken to ascertain facts relevant thereto.
(d) the nature and duration of any relevant disability.
(e) the extent to which the applicant acted promptly and reasonably after becoming aware of the relevant facts and circumstances.
(f) the steps taken by the applicant to obtain relevant advice including legal advice or representation and the nature of such advice.
(see s.36 Limitation Act 1985 s.36(ACT)).
79F. In the present case, the delay, though lengthy, is not likely to have dimmed the recollection of the prospective witnesses as
to the alleged thefts. If anything, it is the applicants who would suffer prejudice not the respondent, assuming documentary evidence
to be important to their case.
79G. The reasons for the delay on the part of the applicants are reasonable in the circumstances, including as they do, reliance on
counsel to look after the applicants' interests in Mr. Darragh's unavoidable absence. Whether or not he was served with a copy of
the ex parte order in 2009, as the respondent claimed, it is also clear that the respondent took no prompt steps to awaken the applicants
to their peril.
79H. Finally, there is the unfortunate circumstance surrounding the death of Mr. Latu, the applicants' counsel. Whilst the details
are unclear, it is open to the conclusion that had he been able to do so, Mr. Latu would have competently dealt with the matter.
It was reasonable for the respondents so to assume.
79I. In any event, it is usually better to engage with a primary party rather than to fall back on an action against lawyers for negligence.
– See Stefek v. Garnama Pty Ltd [2014] ACTSC 140.
79J. Thus, despite the delay, it seems to me that the applicants have shown that it is just and reasonable to set aside the default
judgment. It is in the interests of justice that the allegation of serious wrongdoing by the respondent be tested and determined.
If indeed, the respondent is found to be an unjust steward, it is right that he should not profit from his own injustice to the applicants.
79K. In any event, the award of damages is prima facie excessive quite apart from any moral turpitude that might be found to taint
the respondent's claim.
79L. There is also the undoubted fact that no notice of intention to proceed ex parte appears to have been given to the applicants.
79M. The decision to refuse the application to set aside the ex parte judgment of Magistrate Linge by Magistrate Oiveke is quashed.
In lieu thereof, the ex parte orders made by Magistrate Linge are set aside and the applicants let in to defend. The first applicant
is dismissed from the proceedings.
- The matter is remitted to the District Court at Rabaul to be heard and determined according to law. I will hear the parties as to
further directions and costs.
______________________________________________________
Warner Shand Lawyers: Lawyers for the Applicants
Donald & Company Lawyers: Lawyers for the Respondent
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