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National Court of Papua New Guinea |
N8616
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 811 OF 2012
BETWEEN:
NORBERT TAND
Plaintiff
AND:
NEWCREST MINE LIMITED (formerly known as “LIHIR GOLD LIMITED)
First Defendant
Wabag: Makail J
2020: 12th, 16th & 23rd October
CONTRACT – Assessment of damages – Breach of contract of employment – Repudiation of contract – Damages flowing from repudiation of contract – General damages for loss of salary under the contract – Payment of one year loss of salary as general damages for lost opportunity – Contingency – General damages for frustration, distress and hardship.
Facts
The Plaintiff is an Accountant by profession. He was previously employed by Barrick Gold Limited and based at Porgera. He was offered a position with the Defendant. He resigned from Barrick to take up the offer. He signed a contract of employment for a period of two years. Prior to departure for Lihir, the Defendant informed him that the position was withdrawn and he was no longer required. He sued the Defendant for breach of contract.
Held
1. There are at least four different situations where damages may be awarded in a case where a contract of employment is terminated. These are:
(a) Where there is no provision in the contract for parties to terminate the contract before the expiry of the contract, damages will be awarded for the full balance of the contract: Rooney v. National Forest Authority [1990] PNGLR 914.
(b) Where it is an expressed term of the contract that the employee is entitled to be paid out the balance of the contract in the event of early termination for specified cause, damages for the full balance of the contract will be awarded: Bromley Pacific Finance Limited [2001] N2097.
(c) Where the contract provides for notice to be given and where no notice and reasons are given, damages will be awarded for the balance of the contract: Peter Aigilo v. Sir Mekere Morauta & Ors (No 2) [2001] N 2103.
(d) Where the contract provides for notice to be given and the employee is terminated for cause, the employee is entitled to payment in lieu of notice for the period of notice: Michael Kandiu v. ANZ Bank [2002] N 2226; Paul Pora v. Poliamba Limited [2008] N 3582 and Robert Kapo v. Ayleen Bure & Ors [2010] SC 1162.
2. Damages for breach of fixed term contract is assessed on the basis of salary and other entitlements which the employee is entitled to receive if the contract was lawfully terminated: Porgera Joint Venture Manager Placer (PNG) Limited v. Robin Kami [2010] SC 1060.
3. In a case where the employee signed a contract of employment for a fixed term and the contract is repudiated by the employer prior to commencement of employment, the employee is entitled to an award of damages for loss of salary for up to one year less any contingency: David Walker v. Citigroup Global Markets Australia Pty Limited formerly known as Salmon Smith Barney Australia Securities Pty Limited [2006] FCAFC 101 adopted.
4. The Plaintiff was awarded one year for loss of salary as general damages for “lost opportunity.”
5. Further, the Plaintiff was awarded K10, 000.00 as general damages for frustration, hardship and distress.
Cases Cited:
Papua New Guinea Cases
Porgera Joint Venture Manager Placer (PNG) Limited v. Robin Kami [2010] SC 1060
Peter Aigilo v. Sir Mekere Morauta & Ors (No. 2) [2001] N 2103
Rooney v. National Forest Authority [1990] PNGLR 914
Bromley v. Pacific Finance Limited [2001] N 2097
Michael Kandiu v. ANZ Bank [2002] N 1116
Paul Pora v. Poliamba Limited [2008] N3582
Robert Kapo v. Ayleen Bure & Ors [2010] SC 1162
Moro Stokes v. Global Constructions [2008] N 3491
Susan Love (substitute for Fabian Love – Deceased) v. Bridgestone Tyres (PNG) Limited: SCA 1 of 2006 dated 3rd September, 2010
Joe Naguwean v. The State [1992] PNGLR 367
Overseas cases
David Walker v. Citigroup Global Markets Australia Pty Limited (formerly known as Salmon Smith Barney Australia Securities Pty Limited) [2006] FCAFC 101
Counsel:
Mr. J. Yapao, for the Plaintiff
Mr. Koye Peri, for the Defendant
JUDGMENT
23rd October, 2020
1. MAKAIL J: This is a trial on assessment of damages following entry of judgment on liability on 3rd September, 2020. It arises from a breach of contract of employment.
2. The uncontroverted evidence of the Plaintiff is that, he is an Accountant by profession. He was previously employed by Barrick Gold Limited at Porgera as a Cost Control and Accounts Officer. He was offered a position with the Defendant as a Claims Processing Officer. He signed a contract of employment for a period of two years. He resigned from his job with Barrick Gold Limited to take up the offer. The annual salary was K32, 000.00 plus other privileges. Prior to departure for Lihir where he was to be based, by letter dated 1st March 2008 the Managing Director of the Defendant advised him that the offer was withdrawn and he was no longer required.
3. He claims:-
(a) General damages for balance of contract of two years in the sum of K64, 000.00.
(b) Alternatively, a sum of K81, 991.00 as damages for loss of salaries from Barrick Gold Limited.
(c) K6, 970.38 as payment in lieu of notice.
(d) K10, 000.00 for out of pocket expenses in pursuing the claim with the Defendant.
(e) K250, 000.00 as general damages for pain, stress, distress, frustration and hardship.
(f) 8% interest pursuant to the Judicial Proceedings (Interests on Debts and Damages ) Act, 2015.
(g) Costs.
4. This is a case where the contract of employment was repudiated. A contract is repudiated when one party tells the other party to the contract that it does not intend to perform its obligation or it simply acts in such a way that shows an intention not to perform. In this case, the Defendant repudiated the contract of employment when it advised the Plaintiff that the position was withdrawn.
5. The issue is the measure of damages to award in a case where the contract is repudiated. The Plaintiff contend that damages should be for the balance of the contract in line with the Supreme Court decision in Porgera Joint Venture Manager Placer (PNG) Limited v. Robin Kami (2010) SC1060, Peter Aigilo v. Sir Mekere Morauta & Ors (No. 2) (2001) N2103 and Rooney v. National Forest Authority [1990] PNGLR 914 and Bromely v. Pacific Finance Limited (2001) N2097.
6. Alternatively, damages should be awarded for lost salaries and benefits from his previous employment at Barrick Gold Limited.
of employment, he was bound by it and is subject to probation period and termination
of employment of one month notice under clause 22 (ii) (a). As such, the Plaintiff is
entitled to one month pay as money in lieu of notice. It equates to K6, 970.38. The
Defendant relied on the following cases to support this submission: Michael Kandiu v.
ANZ Bank [2002] N2226; Paul Pora v. Poliamba Limited [2008] N3582, and Robert
Kapo v. Ayleen Bure & Ors [2010] (2002) N2226.
settlement offer on a without prejudice basis and it is open to the Court to rely on the
“without prejudice” offer and award a sum of K150,000.00 or K75, 000.00. This sum
was offered to the Plaintiffs’ through his former lawyers but it received no response
from the Plaintiff. It relied on the decision in Moro Stokes v. Global Constructions
[2008] N3491 which held that without prejudice correspondences exchanged between
the parties are admissible if they go to show that the parties intended to be bound by
the agreement made between the parties.
put the injured party in the same position, as far as money can do it, as if the contract
had been performed.
Robin Kami (supra), the Supreme Court observed:
“damages for breach of fixed term contract should be assessed on the basis of salary and other entitlements which the employee is entitled to receive had the contract been lawfully terminated.”
Plaintiff was terminated as Commissioner of Police where no notice and reasons were
given except that he was terminated in the interest of the State, he was awarded
damages for the full balance of the contractual period.
contract for parties to terminate the contract before the expiry of the contract, the
Plaintiff was awarded damages for the full balance of the contract.
(supra), In that case, there was an expressed term in the contract that the employee
was entitled to be paid the balance of the contract in the event of early termination for
specified out cause. Therefore, damages for the full balance of the contract was
awarded.
(PNG) Limited: SCA 1 of 2006 dated 3rd September 2010 the Supreme Court upheld
the trial judge’s decision to award K1, 350.00 in damages for premature termination of
the contract of employment. The contract provided termination by either party giving
one month’s notice in writing. Bridgestone gave one month’s notice. The Supreme
Court in dismissing the appeal held that:
“The employment contract signed on 23rd January 1997 was one that provided that termination can take place where one party gives the other the relevant notice of the termination. Damages are therefore equivalent for the period of appropriate notice only.”
15. I distinguish all these cases from this case on one factual difference. In all those cases the Plaintiffs were employed either on a probation as in Michael Kandiu v. ANZ Bank (supra) or permanent when their employment was terminated by the employer. In this case, the Plaintiff did not even start work including his probation for three months with the Defendant when the position was withdrawn by the Defendant. This factual difference render the cases relied upon by both parties irrelevant and of no assistance to assess the damages that flow from the breach.
16. The nearest case that may offer some assistance in determining whether damages should be assessed for loss of salaries from date of notification of employment or commencement of employment to end of probationary period or for the balance of the contract is Joe Naguwean v. The State [1992] PNGLR 367. In that case, the National Court assessed damages for loss of wages for the probationary period. This was because Mr. Naguwean was never employed by the National Parliament. Significantly, and this is the factual difference between that case and the present case Mr. Naguwean did not resign from the University and presumably was being paid by the University while waiting for the commencement date to commence work at the Parliament.
17. The Court assessed damages based on the difference between the annual gross salary at the University and gross salary of the Principal Clerk of Committee. The difference was awarded not as loss of salary but “damages for lost opportunity” so that it does not attract income tax.
18. Given the fact that Mr Naguwean was still employed by the University when the offer by the Parliament fell through and in this case, the Plaintiff resigned and was on his way to take up the new job with the Defendant, I propose not to adopt the approach taken by the Court in Naguwean case (supra) to assess the Plaintiff’s loss in the present case.
19. Mr. Yapao of counsel for the Plaintiff was industrious. He referred me to a decision of the Full Federal Court of Australia in David Walker v. Citigroup Global Markets Australia Pty Limited (formerly known as Salmon Smith Barney Australia Securities Pty Limited) (2006) FCAFC 101 by Gyles, Edmonds and Greenwood JJ which, in my view, addresses the issue at hand. The issue is, what is the measure of damages in a case where a contract of employment is repudiated by the employer prior to commencement of employment by the employee?
20. Summarising the facts, Mr Walker was an Executive Director and Head of Research at ABN AMRO, a company which he had joined in 1995. In August 1997, he was offered a position of Senior Resource Analyst with the Research Department of the Equities Division of NatWest Securities Australia Limited (NatWest). He was informed that a sale was being planned but it would not affect NatWest’s interest in recruiting him.
21. It turned out that the sale of NatWest’s interest proceeded and the new owner, a company called Salmon Smith Barney Australia Securities Pty Limited which was a subsidiary of a US based stock broking company took over. To cut the long story short, it then changed its name to Citigroup Global Markets Australia Holdings Pty Ltd. Citigroup decided not to recruit Mr. Walker. Mr Walker sued for breach of contract and misrepresentation under the Trade Practices Act.
22. The trial Judge awarded damages for payment of money in lieu of one month notice. On appeal, the Full Federal Court construed Mr Walker’s contract as a whole so that all of its clauses were given meaning. That approach led to the conclusion that notice was to be given before the end of the first year only “for cause”, in effect, the contract contemplated employment beyond a year. Given this interpretation, the Court was not bound to limit damages to the notice period.
23. The Full Court awarded damages to Mr Walker for the first year of employment and damages for the “loss of chance” that he would have remained employed for the next five years, discounted by 25% for the possibility of early termination, amounting to $2, 346,553.00.
24. I adopt the approach taken by the Court in Walkers case (supra) in assessing the loss of the Plaintiff because it is sound and fair. First, the Plaintiff acted on the representation by the Defendant that he had secured a job with it and on that representation, he resigned from his position with Barrick. When the Defendant withdrew the position, the Plaintiff was left without a job and means of income. Secondly, as the position at the Defendant was offering an increase in annual salary, it was a promotion for the Plaintiff and recognition for his knowledge and experience acquired at Barrick. It is for these reasons that the Courts’ approach to the assessment of damages in Walker (supra) will be adopted.
25. I award damages for loss of salary of one year for the Plaintiff. The Plaintiff’s base salary for one year under the contract is K32, 000.00. I award this sum as damages for “lost opportunity.”
Other Benefits
26. I note that the Plaintiff is entitled to receive other benefits under the contract. I make mention of these:
(a) Clause 6 (v) – Bonus.
(b) Clause 12 – Annual leave.
(c) Clause 15 - Repatriation.
(d) Clause 23 – National Superannuation Fund.
27. I further note, he makes no claim for these benefits. Thus, no awards will be made.
Contingency
28. A reduction in the award will take into account contingency such as early retirement, death or restructure and redundancy. However, as the contract was for two years and consistent with the decision in Walkers case (supra) where contingency was taken into account by not awarding damages for the balance of the contract, there will be no reduction of the sum awarded.
General Damages for frustration, distress and hardship
29. The Plaintiff submitted that he has suffered immensely as a result of the job loss. Added to that is that, two of his children did not attend school. Although there is no independent evidence from the school to corroborate the Plaintiff’s assertion, the Defendant does not contest this assertion.
30. He claimed K250, 000.00. The Defendant submitted the sum claimed is not supported by medical evidence as to the extent of the Plaintiff’s suffering and a nominal sum of K1, 000.00 should be awarded consistent with the award made in the case of Joe Naguwean (supra).
31. I accept the Plaintiff’s submission in part that he has suffered as a result of the job loss. This included his two children not going to school due to non-payment of school fees. However, I also accept the Defendant’s submission that there is no medical evidence to show the extent of the suffering which would enable me to confidently conclude that he is entitled to the sum claimed.
32. In Peter Aigilo v. Sir Mekere Morauta (supra) Mr. Aigilo tendered a medical report to support the claim for damages for frustration, distress and hardship and was awarded K20, 000.00. In contrast, a nominal sum of K1, 000.00 was awarded in Joe Naguwean (supra) because he was not able to prove his suffering or rather; he placed himself in the untenable position by not resigning from the University to take up the position at the National Parliament. Thus, striking a balance between the awards in these two cases, I award K10, 000.00 for frustration, distress and hardship.
Orders
1. The final judgment is:
______________________________________________________________
Mackenzie Lawyers: Lawyers for the Plaintiff
Warner Shand Lawyers: Lawyers for the Defendant
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