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Tai v Aka [2020] PGNC 286; N8618 (6 November 2020)

N8618

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

HRA NO. 133 OF 2018

BETWEEN:
NELSON TAI & 28 OTHERS
Applicants

AND:
JOE AKA AS MANAGING DIRECTOR OF RAMU DEVELOPMENT FOUNDATION LIMITED
First Defendant

AND:
RAMU DEVELOPMENT FOUNDATION LIMITED
Second Defendant

AND:
MADANG PROVINCIAL GOVERNMENT

Third Defendant
Madang: Narokobi J
2020: 19^th August, 10^th, 22^nd, 24^th, 25^th September and 6^th November

CONTRACT OF EMPLOYMENT – Private Contract for fixed term – Termination without notice – Payment of money in lieu of notice period prescribed by Contract - Termination without reason – Liability established

DAMAGES – Written Contract of Employment – Private Contract for fixed term- Term of Contract – Termination, without reason, on 4 weeks notice or without notice payment of money in lieu of notice- Termination- Early termination without notice- Money in lieu of notice paid- Termination without reason - Measure of damages – Whether damages should be confined to money in lieu of notice or extended to include wages for remaining period of contract- Whether additional damages should be awarded for general damages and punitive damages.

The applicants are former employees of the second defendant. A majority of them were employed on written contracts. They were suspended and not informed of their future employment. At the trial on liability it was established that the second and third defendants breached their employment contracts in that they were constructively terminated.

Held:

(1) Although the defendants have breached the applicant’s contract of employment, they are not entitled to be paid the balance of their contract. Instead, the applicants are only entitled to be paid for the notice period and any outstanding entitlements on a pro rata basis (Porgera Joint Venture v Kami (2010) SC1060– followed).

(2) The applicants have not provided sufficient evidence for the court to award damages for the notice period and final entitlements, however as they have established a cause of action for breach of employment contract, they should not be left without remedy and an amount considered reasonable in the circumstances, being 10% of the total amount claimed for each applicant is awarded to each applicant (Jonathan Paraia v. State (1995) N1343– adopted).

(3) The applicants suffered hardship and distress directly related to the breach of their employment contract, and having provided evidence to support this claim, are entitled to general damages assessed at K10,000 for each plaintiff.

(4) The manner in which the applicants were treated, in that they were suspended en masse, and the defendants had no intention to reinstate them, as a result of which they were constructively terminated, terminating them without paying them their notice period and final entitlements is egregious conduct that warrants the awarding of punitive damages, assessed at K5,000 for each of the applicants.

(5) Interest is discretionary and is awarded at 8% pursuant to the Judicial Proceedings Interests on Debts and Damages) Act 2015 on the total judgment sum from the date of filing of the writ to the date of judgment (Sorum v Aloi (2020) N8416, adopted).

Cases Cited:

The following cases are cited in the judgment:
Ambo v Woodford (2016) N6254
Baboa v PNG Communication Workers Union (2006) N3043
Felix Kua v. Clement Patiken (2010) N4103
Independent State of Papua New Guinea v Hodson [1987] PNGLR 241
Jonathan Paraia v. State (1995) N1343
Lewis v Lae Builders & Contractors Ltd (2014) N7554
Porgera Joint Venture v. Robin Kami (2010) SC1060
Sorum v Aloi [2020] PGNC 193; N8416 (16 July 2020)

Counsel:
Mr. B. Tabai, for the Applicants
Mr. J. Lai, for the Defendants

JUDGMENT

6^th November, 2020

1. NAROKOBI J. The applicants sued the defendants for breach of human rights and breach of contract of employment. On 9 March 2020 the court dismissed the claim for breach of human rights and ordered that liability for breach of contract be entered against the defendants and for damages to be assessed. The matter has now come before me for assessment of damages. In the court’s decision of 9 March 2020, the claim against the first defendant was dismissed and the second and third defendants were found liable for breaching the applicant’s contract of employment.
   
2. The applicants are former employees of Ramu Development Foundation Ltd (RDFL), the second defendant.
   
3. At the material time, the applicants were suspended without formal notification as to their future employment and the status of their employment terms and conditions. After a period of time it became apparent that they were not going to be recalled. In the court’s ruling on liability of 9 March 2020, it found that the applicants were in fact constructively terminated.
   

A ISSUES

4. After having considered the facts and circumstances of this case, I consider the issues for me to determine to be as follows:
   
   • Whether the applicants are entitled to loss of salaries and allowances for the balance of their employment contract?;
   • Whether the applicants are entitled to general damages?;
   • Whether the applicants are entitled to punitive damages?
   • Whether the applicants are entitled to interest pursuant to the Judicial Proceedings (Interests and Debts and Damages) Act 2015?
   • Whether the applicants are entitled to costs?
     
5. Essentially the applicants are claiming damages after the issue of liability was determined in their favour.
   
6. I do not consider other heads of damages apart from the ones referred to above, such as special damages as there was no evidence led on this aspect of the claim. Special damages are claims for fixed amounts of sum directly related to the breach of a contract supported by evidence such as invoices and receipts. In this case, although there was a breach of contract, there was no evidence tendered for special damages, so I dismiss this claim.
   

B FACTS

7. To support the claim for damages each of the applicants filed affidavits. The applicants essentially rely on their contract of employment, which set out the distress and inconvenience they suffered as a result of their abrupt suspension (and eventual termination as the court found). They rely particularly on the affidavit of Michael Fen filed on 20 June 2020 which outlines what each applicants is entitled to receive with regards to the balance of their contract of employment.
   
8. Michael Fen is an accountant by profession and held the position of Chief Financial officer before his termination by the new management of RDFL.
   
9. I note that the orders entering liability is only in respect of the 21 applicants who have filed affidavits at the trial on liability. Paul Akuram has filed an affidavit on assessment of damages but not on trial on liability. The tendering of his affidavit was not objected to by the defendants. After having considered the materials deposed to in his affidavit, I consider that his cause of action arose from the same set of facts in relation to the unlawful termination, so I allow his claim. In respect of the claim by Sena Salum and Daniel Luwis, there is no affidavit material filed both on liability and quantum of damages, so I dismiss their claim.
   
10. The claims of the applicants are as follows:
    

(Continuation from the table above.....)

(Continuation from the above table.......)

11. The defendants have filed one affidavit in response, that of Joe Aka, filed on 5 August 2020. The main contention in that affidavit was the validity of the contracts of employment. I note that the court has resolved the issue of liability and determined that there was a breach of employment contract. I am therefore precluded from revisiting that issue.
    
12. Each of the 22 applicants above have filed affidavits outlining various hardships they suffered as a result of the termination of their contracts. These range from not being able to keep up with loan repayments, non-payment of school fees, loss of reputation and other similar difficulties.
    

C THE LAW

13. The law on damages for breach of employment contract appears to be settled on the issue of whether a person is entitled to claim for the balance of the contract of employment. A plaintiff can only claim for the notice period (Porgera Joint Venture v Kami (2010) SC1060). In order to successfully claim for the balance of the contract of employment, there must be specific clause in the contract which provides for this (Porgera Joint Venture v Kami).
    
14. On the question of general damages, the law does not appear to be decided from the several Supreme Court decisions that I have considered such as Porgera Joint Venture v Kami and Independent State of Papua New Guinea v Hodson [1987] PNGLR 241. The former decision appears to be implicitly stating that general damages is not recoverable. The latter case suggests that general damages is recoverable in a breach of employment contract. What I can confirm from the National Court decisions is that they offer two different views. Lewis v Lae Builders & Contractors Ltd (2014) N7554 appears to suggest that general damages is not available for breach of employment contract. However, in Baboa v PNG Communication Workers Union (2006) N3043, Ambo v Woodford (2016) N6254, and my own decision in Sorum v Aloi (2020) N8416, general damages was awarded for breach of employment contract for distress and inconvenience. In Sorum I followed Baboa in awarding general damages. I would therefore conclude that it is a matter of discretion, depending on the circumstances of each case. Importantly, it must be claimed in the pleadings and evidence led to support distress suffered as a direct result of the breach.
    
15. With respect to punitive damages, I have regard to Cannings J statement in Felix Kua v. Clement Patiken (2010) N4103:
    

“16. Better known as exemplary damages, punitive damages are a special category of damages which are awarded for the purpose, not of compensating a plaintiff, but of punishing a defendant – the wrongdoer – for a particularly egregious or wilfully wrongful act, as distinct from a less severe form of wrongful conduct. It provides a deterrent against similar conduct by others (Alex Latham & Kathleen Latham v Henry Peni (1990) N1463; James Koimo v The State [1995] PNGLR 535; Abel Tomba v The State (1997) SC518; Kenneth Bromley v Finance Pacific Ltd (2001) N2097; George Kala v Joseph Kupo (2009) N3677).”

16. I apply the law as decided by these cases to the facts of this case.
    

D ADDRESSING THE ISSUES

1. First Issue
   
17. As I have stated above, I have examined the case authorities on breach of employment contracts, and the authority from the Supreme Court is that the plaintiff is only entitled to be paid for the notice period in the contract of employment and not for the balance of the contract period. I am bound by the Supreme Court decision. I can only order that the defendants pay each of the applicants a month salary as this is what is provided in their contract of employment.
    
18. I also consider it appropriate that the applicants should be entitled on a pro-rata basis any allowances that is due to them that have not been paid into their fortnightly salary such as annual leave, long service leave and gratuity. So I would grant this to the applicants too.
    
19. Therefore the claim by the applicants to be paid the balance of their employment contract is not supported by the case authorities, and so I do not make an order for them to be paid the balance of their contract. I reject this claim. The authorities do not support such remedies.
    
20. In this particular case, the applicants have not provided sufficient evidence for the court to calculate amounts due under the notice period and any outstanding unpaid entitlements. In a situation such as this, I take into account what Injia J (as he then was) said in Jonathan Paraia v. State (1995) N1343:
    

“The plaintiff is entitled to damages, he cannot be allowed to go without a remedy. As Vaughan Williams LJ put it in Chaplin v Hicks [1911] UKLawRpKQB 104; [1911] 2 KB 786 at p. 792:

“The fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages.”

In the circumstances of the instant case, it the duty of the Court to arrive at a probable value of the house. As Devlin J said in Biggin v Permanite [1951] 1 KB 422 at 438:

“Where precise evidence is obtainable, the Court naturally expects to have it (but) where it is not, the Court must do the best it can.”

21. In the exercise of my discretion, I will award 10% of the total amount claimed as a fair approximation of the amount due for the notice period and any unpaid balance of their accrued entitlements. Under this category each applicant is therefore entitled to the following amounts:

2. Second Issue
   
22. On the second issue of general damages for the breach of contract, the law is not clear on the point, and I have referred to the National Court decisions which awarded general damages for stress and inconvenience for breach of an employment contract.
    
23. I will therefore be guided by the general rule on pleadings, that in order for a claim to succeed, it must be sufficiently pleaded and supported by the evidence.
    
24. In the present case, the court has found that there was constructive termination of the plaintiffs. They were abruptly informed that they were suspended. They were left in a cloud of uncertainty. They were put of their salaries. Uncertain of their future, they could not mitigate their loss. They had to survive on their personal savings before it became inevitable to them, that they were not going to be employed again. For this reason, the court found that they were constructively terminated.
    
25. In this case, the applicants claim general damages in the statement of claim. They have also led evidence to support their claim. I am therefore persuaded by the argument that I should award general damages for distress and inconvenience for the breach of employment contract. The difficult question I must answer is how much I should award for general damages.
    
26. The applicant spelt out various hardships they have endured in their affidavit material. This has not been rebutted by the defendants with contrary evidence. I am therefore left with the uncontested evidence of the applicants. I have considered the cases of Baboa which awarded K10,000 and Sorum which awarded K20,000, and I am inclined to take the approach in Baboa, for the reason that the notice period is one month and K10,000 should compensate them for the notice period which was not afforded to them by the defendants, and so I award K10,000 in general damages for each of the applicant.
    
    3. Third Issue
       
27. On the third issue of punitive damages, as stated above, I am guided by this court’s decision in Felix Kua v. Clement Patiken to determine if I should award this type of damages. In Lewis v Lae Builders & Contractors Ltd which did not award general damages in a case of breach of employment contract, did consider awarding punitive damages, but did not award it as the established facts showed that the conduct of the defendants were not egregious and therefore did not warrant the award of damages of this nature.
    
28. In deciding this issue for this case, I take the following factors into consideration.
    
29. The applicants were terminated en masse without any proper factual and or legal grounds. The court has found as much when it determined the issue of liability for breach of employment contract. It was unfair to treat the applicants in this manner. They had families. Families depend on their salaries. Loans were obtained and they planned their lives around the income they received. It was alarmingly disconcerting to suddenly pull the rug under their feet. On this basis, I find that a case for punitive damages has been made out.
    
30. It is a matter for the court’s discretion to award an appropriate amount for punitive damages, and I must decide what is an appropriate amount in the special circumstances of this case. In my view a sum of K5,000 for each of the applicants will send a message to the defendants that as an employer, although they have the right to hire and fire, termination must be done fairly and humanely.
    
31. Each applicant is therefore awarded K5,000 each in punitive damages.
    
    4. Fourth Issue
       
32. The applicants did not plead interest in its statement of claim. However, it is a matter of discretion for the court to award, and so in the exercise of my discretion, I award interest at the rate of 8% from the date of filing of the statement of claim, 10 December 2018 to the date of judgment, that is 6 November 2020. I have taken the view in Sorum that the provincial government is not part of the state for purposes of the Judicial Proceedings (Interests on Debts and Damages) Act 2015 and so the cap of 2% does not apply to it.
    
33. In this particular case, there is an another legal entity, a private company albeit wholly owned by the provincial government that has also been found to be liable, and since that entity and the provincial government are jointly and severally liable, it is only proper that interest is awarded at 8%.
    
    5. Fifth Issue
       
34. The general rule is that costs follow the event. However, in this particular case, the applicants have barely pleaded their cause to get them this far. In the circumstances, in the exercise of my discretion, I will order fixed costs in the sum of K3,000 for each applicant.
    

D CONCLUSION AND ORDERS

35. In light of the foregoing, I make the following orders:
    
    1. The second and third defendants jointly and severally pay each applicant a month salary (two fortnights) in lieu of notice and outstanding entitlements, assessed at 10% of the total amount claimed in the affidavit of Michael Fen filed on 20 June 2020;
    2. The second and third defendants jointly and severally pay each applicant general damages, assessed at K10,000.00 for each applicant;
    3. The second and third defendants jointly and severally pay each applicant punitive damages, assessed at K5,000 for each applicant.
    4. Interest is awarded at 8% on the judgement sum, constituting total amounts of each item awarded in paragraphs 1, 2, and 3 above, calculated from the date of filing of the statement of claim to the date of judgement, being 6 November 2020;
    5. Total judgement sum paid to each applicant is therefore as follows:

6. Any amount ordered to be paid (6) The amount ordered to be paid by the second and third defendants that is unpaid within 30 days from today shall have interests accrue at 8% on such unpaid amounts;
7. The second and third defendants jointly and severally pay each applicant’s costs, fixed at K3,000 each;
8. Time is abridged; and
9. File is closed.
   

________________________________________________________________
Tabai Lawyers: Lawyers for the Applicants
Thomas More Ilaisa Lawyers and Attorneys: Lawyers for the Defendants