Home | Databases | WorldLII | Search | Feedback National Court of Papua New Guinea

Tangit v PNG Power Ltd [2019] PGNC 489; N8836 (2 May 2019)

N8836

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS 467 OF 2016

BETWEEN:
JOHN TANGIT
Plaintiff

AND:
PNG POWER LTD
First Defendant

AND:
ANDREW OGIL as CHAIRMAN of PNG POWER LTD BOARD
Second Defendant

AND:
KUMUL CONSOLIDATED HOLDINGS
Third Defendant

Waigani: Thompson J
2019: 24^th April, 2^nd May

EMPLOYMENT LAW - Termination of Employment – Breach of Contract – Whether conduct amounted to misconduct – Whether misconduct had to be in contract period – No entitlement to natural justice in termination under contract.

Counsel:

Mr E Komia, for the Plaintiff

Mr E Andersen & Ms M Tusais, for the Defendants

2^nd May, 2019

1. THOMPSON J: The Plaintiff has sued the Defendants for unlawful termination of his employment. He seeks reinstatement, damages and various Declarations.

Facts

2. The Plaintiff had been employed by the First Defendant since 1991 in various positions. From 2009 – 2012 he was General Manager Operations and Management, from 2012 – 2015 he was Acting Chief Operating Officer, and from 1 April 2015 he was the Chief Executive Officer (“the CEO”) pursuant to an employment agreement for a period of 3 years (“the contract”).
   
3. The First Defendant is the employer under the contract, and by its Constitution, it is a Majority State Owned Enterprise.
   
4. The Second Defendant is the Chairman of the Board of the First Defendant, and is not alleged to have acted in any other or personal capacity.
   
5. The Third Defendant is the trustee shareholder of the First Defendant, pursuant to the Independent Public Business Corporation of Papua New Guinea Act/Kumul Consolidated Holdings Act 2002 (“the KCH Act”).
   
6. By clause 19 of its Constitution, the First Defendant may appoint and remove a CEO by ordinary resolution of the Board, and the CEO is not a director.
   
7. The contract included the following relevant clauses:
   

3.3 The employee shall comply with the PNG Power Code of Conduct, and shall:

(a) devote his full business time and attention exclusively to the business and affairs of the employer;

(d) refrain from any action calculated to create discord or disharmony among the employees of the employer or incite industrial strife or disruption for no legitimate cause;

(f) not enter into the service of or be employed in any capacity for any person and company other than the employer without prior approval.

26.1 Either party may terminate this Agreement by 3 months written notice or payment in lieu.

26.2 Immediate termination of the employee will result if the employee engages in fraud, misconduct, misrepresentation or dishonest behavior.

26.3 The employer may terminate the Agreement with 2 months written notice for non-performance of the employee’s duties and obligations and specified in clause 3.

8. The Plaintiff’s employment had been suspended in 2014 and subsequently revoked, and again on 31 July 2015 and reinstated on 29 February 2016 pending an investigation into allegations of misconduct relating to the Angoram Regional Electrification Project (“AREP”).
   
9. A new Board was appointed by the NEC, and on 9 March 2016 the Board met. The Minutes show that the resignation of one director Garry Hersey, was accepted. The Board then considered a Report prepared by expert forensic investigation company Korda Mentha on an investigation into the AREP (“The KM Report”), accepted the report, rescinded the earlier decision to reinstate the Plaintiff, approved the immediate suspension of the Plaintiff, and resolved to give him 14 days in which to respond to the allegations relating to the AREP.
   
10. The next day, on 10 March 2016, the Plaintiff wrote and issued a Circular Letter to all the First Defendant’s staff. In this letter he stated, inter alia, that the NEC appointments to the Board were in-valid, that Garry Hersey’s appointment in particular was not valid, that some of the directors were inexperienced, that one director had breached the law, had serious ethical issues and was not a fit and proper person, that the First Defendant could not validly operate, and the Plaintiff called for an immediate revocation of the entire Board, and termination of the Managing Director for serious breaches of the law.
    
11. On 14 March 2016 the Second Defendant signed a letter to the Plaintiff on behalf of the First Defendant, informing him that the Board regarded his Circular Letter of 10 March 2016 as serious misconduct and a breach of his contract, entitling them to immediately terminate him.
    
12. On 14 March 2016 the Second Defendant signed another letter to the Plaintiff on behalf of the First Defendant, suspending his employment, setting out various allegations, and requesting his written response within 14 days.
    
13. On 16 March 2016 the Plaintiff requested a copy of the investigation report referred to by the First Defendant, but his request was declined.
    
14. On 24 March 2016 the Plaintiff provided a lengthy written response. In essence, he denied the Defendants power to suspend or investigate him, said that the Defendants allegations were too general and were highly defamatory, threatened possible legal proceedings against them, and denied that he has breached his contract. He stated that he did not own any company, and denied being a director or shareholder of any company.
    
15. On 6 April 2016 the First Defendant held another meeting. The Minutes show that the Board considered the Plaintiff’s report and the KM Report, took legal advice, and then resolved to terminate the Plaintiff’s employment for failing to declare a conflict of interest in relation to the AREP arising out of his involvement with the Tender process, with PNG Engineering and Power Services (“PNGEPS”) with Sepik Metal Industries Ltd (“SMI”), with One Speed Motoring Ltd (“One Speed”), with the tender process by the East Sepik Provincial Government (“ESPG”), and for issuing the circular of 10 March 2016 in breach of clause 3.3 (d) of his contract.
    
16. On 6 April 2016 the Second Defendant signed a letter to the Plaintiff on behalf of the First Defendant, terminating his employment for gross misconduct, with immediate effect.
    

Issues

17. In his statement of claim filed on 11 May 2016, the Plaintiff alleges numerous breaches of his contract of employment.
    
18. The Plaintiff alleges a breach of clause 1.2 which provides for the 3-year term. However, the contract is clearly subject to the early termination provision in clause 26. This ground is rejected.
    
19. The Plaintiff alleges that he was entitled to but did not receive natural justice in his termination. However, the termination of the Plaintiff’s employment was not an administrative decision, it was a decision governed by the terms of a contract which did not include a right to natural justice. In Jimmy Malai v PNG Teachers Association (1992) PNGLR 568, the Supreme Court said:
    

“Any suggestion of a duty to act fairly and any rights under the Constitution to natural justice, only go so far here as to whether he was terminated with proper notice such as that required under the Employment Act ... in the absence of any contractual arrangement which provided otherwise.”

The Plaintiff was given, and took, the opportunity to respond to the notice of the allegations against him. The First Defendant considered all the material including his response and legal advice, before making a decision. The process by which the First Defendant exercised its termination rights under the contract, was not in breach of any contractual or other obligation. This ground is rejected.

20. The Plaintiff alleges that it was the Third Defendant and not the First Defendant which commissioned the KM Report. The relevance of who commissioned the report has not been shown. It was not in dispute that the KM Report was issued, and was relied on by the First Defendant. The pleading that the Third Defendant only had power to investigate the First Defendant but not its employees, is not relevant, as it was not the Third Defendant which terminated the Plaintiff, it was the First Defendant. The pleading is also incorrect. Under sections 8 and 9 of the KCH Act, the Third Defendant was entitled to do all things necessary to be done in connection with the performance of its function of monitoring Majority State Owned Enterprises, which included the First Defendant.
    
21. The Plaintiff alleges that the Second Defendant breached clauses 5 and 28 of the contract by unlawfully providing copies of the KM Report to the police and others. He provided no evidence of this. In any event, clauses 25 and 28 only impose confidentiality on the employee, not on the employer, and only in relation to his terms and conditions. The Second Defendant denied providing the report to anyone other than the police, which he did on behalf of the First Defendant pursuant to the Board resolution, and of course in accordance with every person’s right to refer possible breaches of the law to the police. His conduct was not unlawful or in breach of the contract. This ground is rejected.
    
22. The Plaintiff made various arguments against the KM Report, essentially that it was in breach of his constitutional rights and in breach of confidentiality obligations. No breaches of his contract or constitutional rights were shown. This ground is rejected.
    
23. The Plaintiff alleges that in carrying out the investigation, the Defendants breached his constitutional rights by the Third Defendant (this may have been intended to refer to Korda Mentha acting as agents for the Third Defendant) unlawfully entering and searching the First Defendant’s premises and assets without a search warrant, and unlawfully accessed the Plaintiff’s office, work laptop and the First Defendant’s network server. The Plaintiff provided no evidence of any personal assets or property which were taken. As the premises and assets including the office, work laptop and network server were all owned by the First Defendant, no search warrant was required and no authorization or consent was required to be sought from the Plaintiff. The First Defendant denied that it did not authorize the conduct, and no breach of the Plaintiff’s constitutional rights has been shown. This ground is rejected.
    
24. The Plaintiff alleges that because of the above allegations, the Defendants had no power to investigate him or to use the KM Report to determine grounds for termination or to terminate him. As the above allegations have been rejected, this ground is also rejected.
    
25. The Plaintiff alleges that his Circular letter of 10 March 2016 was not sufficient on its own to justify termination, as it was not misconduct.
    
26. Prior to the issue of the Circular, the Plaintiff had already been suspended several times since 2014 by the Board in relation to his alleged misconduct. Under the terms of his (last) contract, he was obliged to comply with the PNG Power Code of Conduct, which included an obligation to refrain from any action calculated to create discord and disharmony among the employees, or to incite disruption for no legitimate cause. He had been specifically warned by the First Defendant that his conduct was being investigated. The Plaintiff says that the Circular only raised his legitimate concerns for the information of the staff to ensure due compliance with the KCH Act. However, the Circular denied the legitimacy of the Board and its directors, and the staff had no power to ensure compliance with the KCH Act or to implement any of the changes called for by the Plaintiff. The effect on employed staff of receiving such a letter from the CEO, would be very likely to result in discord or disharmony among them, for no legitimate cause. The Circular letter also did not reveal that the Board had earlier made allegations of misconduct against the Plaintiff which had led to several suspensions and that he remained in dispute with the Board, which would have shown a possible illegitimate motive for the Circular. It was therefore open to, and the Board was entitled to, find that the Circular was intended by the Plaintiff to create discord and disharmony, and was a breach of clause 3.
    
27. Pursuant to clause 26.3, a breach of the obligations in clause 3 is sufficient to justify termination on 2 months notice.
    
28. This ground on its own was not sufficient to justify immediate termination without notice, unless it also amounted to misconduct under clause 26.2. It is therefore necessary to look at other matters taken into account by the First Defendant when making the decision to immediately terminate.
    

Material before the Board

29. The Board had considered the KM Report and the Plaintiff’s response. In his response, the Plaintiff did not directly answer most of the allegations which had been made, and did not directly deny or refute them. Instead, the Plaintiff challenged the First Defendant’s right to make the allegations, alleged that they were defamatory, and threatened criminal and civil legal proceedings against them.
    
30. There were allegations that the Plaintiff was involved in rigging the tender process between the ESPG and the contractors, PNGEPS and SMI, that almost an entire contract sum was paid to PNGEPS in one week without the work having commenced and despite PNG Power having ultimate oversight of the AREP work, that the Plaintiff had become involved in the process, that the owner of PNGEPS was the Plaintiff’s brother in law, that the owner of SMI was the Plaintiff’s brother, and none of this had been disclosed to the First Defendant or declared as a conflict of interest in any of the Plaintiff’s roles. In his response, the Plaintiff essentially said that what the ESPG and the companies did was their business, and had nothing to do with him or PNG Power. He said he was “... not privy to the terms of the contract” between the ESPG and the contractor companies. He said that it was irrational and flawed to allege that the “... bids by the private contractors ... was influenced by me”.
    
31. In response to a direct question – “Was I involved in drafting the proposed documents to contract between the ESPG and the private contractor PNGEPS?”, he did not answer the question. Instead, he said that the First Defendant had no power to ask the question.
    
32. In response to the direct question – “Is Mr Richard Pii the owner of PNGEPS and is he my brother in law?”, he did not directly answer. Instead, he said that he understood that Mr Pii “... is from Enga Province and married there”. He said that any suggestion of relations between him and Mr Pii may be an offence and defamatory.
    
33. The Plaintiff did admit that SMI was owned by his brother, but said that the First Defendant had no power to “to snoop” into the matter.
    
34. In response to an allegation that he and companies related to him had received monies for the AREP project, he did not deny it. Instead, he said he would not answer because the allegations were too general, were defamatory, and possibly criminal.
    
35. However, the Plaintiff did specifically state – “I have also categorically stated and I say it again I am not a director or a shareholder of any company or companies ...” and “For the record, I do not own any company.”
    
36. In response to the question about conflicts of interest, the Plaintiff said that he would not answer because the allegations were too general.
    
37. In response to the question about breaching the Code of Conduct, the Plaintiff did not deny it. Instead, he said the allegations were defamatory and a witch hunt, and he threatened legal proceedings against them.
    
38. These responses were considered by the Board in the context of the contents of the KM Report. The Report provided IPA records of PNGEPS, SMI, One Speed and JEM Ltd, as well as evidence of the data which had been retrieved from the computer used by the Plaintiff.
    
39. These documents showed, inter alia, that the Plaintiff was the sole shareholder and director of a company, namely One Speed, and was a shareholder and director of another company, namely JEM Ltd. This contradicted the Plaintiff’s response to the Board, by showing that he was the owner and a shareholder and director of two companies.
    
40. They showed that SMI submitted one tender and that PNGEPS submitted three tenders to the ESPG which contained the Plaintiff’s full CV and his name and description as the person who would be the Contract Manager for the PNGEPS project, that the Plaintiff’s company One Speed would be the nominated sub-contractor for the project, and he would also provide his employee as the necessary licensed individual contractor. The three PNGEPS tender documents were signed by the Plaintiff as a witness.
    
41. The documents showed that the Plaintiff’s brother was named as a contact person together with Richard Pii in the tenders. The Plaintiff’s brother was referred to as a representative of PNGEPS. IPA records showed that PNGEPS was only incorporated as a company in March 2013, more than a year after the tender documents had been submitted, and shortly before they were accepted. The documents showed that the Plaintiff’s brother signed the letter of acceptance of the contract as Managing Director of PNGEPS. He also signed the letter of acceptance for SMI. The Plaintiff’s brother witnessed Richard Pii’s signature on the PNGEPS Agreement, and Richard Pii witnessed the Plaintiff’s brother’s signature on the SMI Agreement.
    
42. The data taken from the computer used by the Plaintiff, showed that he had the ESPG tender documents before they were publicly released, including the details of the Terms of Reference for the tenders, that he had input into these and related documents, and also showed the tenders which were submitted by PNGEPS and the subsequent awarding of the contracts. This contradicted the Plaintiff’s response to the Board, by showing that he was privy to the contract terms.
    
43. These documents included Minutes of a meeting on 19 February 2010 between the Plaintiff, his brother and the ESPG. The Minutes record the Plaintiff as introducing the PNG Power team who would be involved in the project, and stating that PNG Power had allocated over K1 million for the AREP, that he was thanked by the ESPG for PNG Power’s plans to supply the power, and that the PNG Power team then visited the Angoram Power Station. There were various other documents showing PNG Power’s Rural Services Business Model for providing power through various projects including the AREP. This contradicted his response, by showing that PNG Power did have a financial and business involvement with the AREP.
    
44. There were copies of invoices from One Speed issued in May and July 2010, showing payments of nearly K80,000.00 required for work provided in Port Moresby, and an invoice signed by the Plaintiff for K10,000.00 in November 2013 requiring payment for work performed for a Singapore company.
    
45. All these documents were sufficient to demonstrate to the First Defendant that the Plaintiff had lied and been dishonest in his response. The Plaintiff had lied about not owning or being a director or shareholder in any company. He had lied about not being privy to the terms of the contracts between the ESPG and the contractors PNGEPS and SMI.
    
46. That this was no mere oversight was confirmed by the Plaintiff’s Answers to Interrogatories and his evidence at the hearing. He swore on oath in his Answers and in his examination in chief that One Speed had never undertaken any business and had been a dormant company since inception, that he was therefore not required to disclose it to the First Defendant, and that he had never been a director or shareholder of any other company during his employment. This evidence was false.
    
47. In his Interrogatories the Plaintiff was evasive in his Answer to questions of payment of about K1 million being made by PNG Power to his brother’s company, Kurakum Lodge Ltd, and payments of over K14 million to Richard Pii’s company, Trackstar Security Services Ltd. He was misleading in saying that he had no personal relationship with Richard Pii except as a contractor to PNG Power, when he in fact had a close relationship with him by virtue of being involved in his contract tender documents, was put forward as a sub-contractor in his tender documents, and had signed as witness to Richard Pii’s signature on the three contract tenders by PNGEPS.
    
48. When asked in cross-examination how he explained all these documents being on his computer, the Plaintiff could only suggest that someone else had put it all there and/or changed it without his knowledge. He could offer no reason as to why someone would do this. He called no evidence to refute the expert evidence produced on behalf of the Defendants that no one could change the automatically updated properties on the data including the last saved by, content created date, data last saved, last provided and editing time, which had all been found on the documents on the Plaintiff’s computer.
    
49. The Plaintiff’s failure to provide a truthful response to the allegations made against him, and the evasive nature of his response, was best demonstrated by his evidence about One Speed. No mention had been made in the First Defendant’s suspension letter to the Plaintiff of 14 March 2016, about One Speed. In his response, the Plaintiff “categorically stated” that he was “not a director or a shareholder of any company” and “for the record, I do not own any company”. It was only later, in the Interrogatories when One Speed was the subject of questions, that the Plaintiff admitted that he owned and was the sole director and shareholder of the company. He said that it was unfair for the First Defendant to raise One Speed, because it had not been one of the companies referred to in his suspension letter. However, the Plaintiff’s categorical statement that he did not own and was not a director or shareholder of any company, and the evidence of One Speed and himself being included in the three tender documents, plainly demonstrated to the First Defendant that the Plaintiff had lied, and that his response was dishonest.
    

Conclusions

50. When considering a termination, the Court’s role is not to substitute its own view of the evidence, all it can do is to determine whether there was before the Board evidence which if accepted would constitute misconduct under the terms of the contract (See Tau Gulu v PNGDF Savings and Loan Society Ltd N1399, and William Maninga v Ramu Sugar Ltd (2010) N4118).
    
51. The issue is therefore whether or not there was before the Board evidence which if accepted would constitute misconduct, misrepresentation or dishonest behavior, which are the grounds set out in clause 26.2 for immediate termination.
    
52. The Plaintiff says that even if there may have been such evidence, it could not be accepted by the Board as constituting misconduct or dishonest behavior, because it occurred prior to his last contract. He says it could not be a breach of his contractual obligations, because his contract was not in effect when the conduct occurred.
    
53. The Defendants say it does not matter when the conduct occurred, it would still be a breach of the last contract.
    
54. Counsel did not refer me to any relevant authority on this argument, and I have been unable to find any. Prima facie, it would seem that misconduct occurring before the contract period would give rise to a different cause of action under the contract or terms of employment in place at that time. However, it is not necessary for me to form a view on this issue.
    
55. The First Defendant did provide some reasons for the decision to terminate, but was not restricted to those reasons, because an employer is not obliged to give any reasons for a decision to terminate. (Pama Anio v Aho Baliki (2004) N2719, Joseph Charlie v Dr Thomas Webster (2008) N3408, Paddy Fagon v Negiso Distributors Pty Ltd (1999) N1900 and New Britain Oil Palm Ltd & Anor v Vitus Sukuramu (2008) SC 946).
    
56. The evidence before the Board comprised not only the KM Report, but also the Plaintiff’s response.
    
57. The Report contained material which, if accepted, would constitute misconduct or dishonest behavior by the Plaintiff before the 2015 contract. The Plaintiff’s 2016 response also contained material which, if accepted as being untrue, would constitute misconduct or dishonest behavior by the Plaintiff during the contract. The Plaintiff’s avoidance of direct answers, his refusal to directly respond to, and his failure to refute, the allegations, combined with statements which were shown to be false, were sufficient material to show misconduct. The response contained statements which were untrue, eg; he wasn’t privy to the tender and contract terms, he had no relationship with Richard Pii, he did not own any company, and he was not a shareholder or director of any company. This was sufficient material to show dishonesty.
    
58. Further, some of the earlier misconduct and dishonest behavior continued in 2015 and 2016, within the contract period. The evidence showed that the Plaintiff was the sole owner and director of one company which was operating as a business, and a shareholder and director of another company. He produced no evidence to show that he had sold or wound up those companies before the commencement of his last contract. This was in breach of his obligations under clause 3.3 of the contract, which required him to devote all his time to the First Defendant and no other business and was in breach of his obligation to disclose his interest in those companies.
    
59. There was also the 2016 Circular letter, which was material before the Board which if accepted was sufficient to show misconduct.
    
60. I am satisfied that there was sufficient material before the Board in the Plaintiff’s response and in his Circular letter, which could be reasonably accepted as showing misconduct and dishonest behavior by the Plaintiff. There were therefore sufficient grounds for the First Defendant to exercise its rights under clause 3.3 and 26.2 of the Agreement.
    
61. I am also satisfied that the Plaintiff has failed to establish that the Second Defendant acted in any capacity other than as Chairman of the First Defendant, and therefore can have no personal liability.
    
62. For these reasons, the Plaintiff has failed to establish that his contract was breached or unlawfully terminated, or that he is entitled to any of the relief sought.
    
63. I therefore make the following orders:
    
    1. The proceedings are dismissed.
       
    2. The Plaintiff is to pay the Defendants’ costs, to be taxed if not agreed.
       

_______________________________________________________________
Jerry Kiwai Lawyers: Lawyers for the Plaintiff
Dentons PNG: Lawyers for the Defendants