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Pundari v Niolam Security Ltd [2021] PGNC 636; N9893 (3 March 2021)

N9893

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1106 OF 2005

MICHEL PUNDARI
Plaintiff

-V-

NIOLAM SECURITY LIMITED
Defendant

Waigani: Kariko, J
2021: 3^rd March

DAMAGES – assessment of – principles – breach of contract of employment– termination on notice or payment in lieu – pleadings to particularize claim – evidence to support claim

The plaintiff seeks damages for the unlawful termination of employment. On appeal to the Supreme Court against the dismissal of his claim, the appeal was upheld, and the Court instead found liability against the defendant. The case was then remitted for assessment of damages.

Held:

1. In a wrongful dismissal case, the assessment of damages is restricted to the salary and other entitlement the employee was entitled to receive if the contract had been lawfully terminated under a notice period in the contract of employment.
   
2. Claims for damages must have foundation in the pleadings and supported by relevant evidence.
   

Cases Cited:

Ayleen Bure v Robert Kapo (2005) N2902
Divine Word University v George Podas (2015) SC1414
Jimmy Malai v PNG Teachers Association [1992] PNGLR 568
Michael Pundari v Niolam Security Ltd (2011) SC1123
Porgera Joint Venture v Romin Kami (2010) SC1060
The Central Bank of PNG v Gabriel Tugiau (2009) SC1013

Legislation:

Superannuation (General Provisions) Act

Counsel:

Mr P Harry, for the Plaintiff
Mr A Chillion, for the Defendant

ASSESSMENT

This is a trial on assessment of damages for breach of contract of employment

3^rd March, 2021

1. KARIKO, J: This case was tried on assessment of damages after it was remitted to the National Court following a successful appeal to the Supreme Court by the plaintiff (Pundari). In the appeal, he argued that the National Court erred in dismissing his claim for unlawful dismissal against the defendant (NSL). The Supreme Court (by majority) upheld the appeal and found the defendant was liable to Pundari in breach of contract. As a consequence, the Court ordered the case return to the National Court for assessment of damages
   

BRIEF BACKGROUND

2. Pundari was employed by NSL as its General Manager under a written contract of employment signed on 19^th January 2005 (the Contract).
   
3. Less than six months into the contract, he was on 18^th July 2005 served a notice of termination that cited three serious disciplinary grounds.
   
4. The plaintiff filed this proceeding for wrongful dismissal, seeking damages. At the trial on liability, Pundari sought to tender into evidence a copy of the defendant’s Operation Procedures Manual, which provides the right for all employees to be heard on disciplinary charges before they may be dismissed from employment. His request was refused by the trial Judge who at the end of the trial, dismissed the plaintiff’s claims.
   
5. As noted earlier, the case went to the Supreme Court on appeal, and returned to the National Court after the appeal succeeded (Michael Pundari v Niolam Security Ltd (2011) SC1123). The majority of the Court concluded at [122]:
   

“There was sufficient evidence before the National Court to conclude that the operation procedures manual, which was incorrectly excluded from the evidence, in fact, gave to all employees including the appellant a right to be heard prior to dismissal. That evidence emerged from oral testimony by the person who replaced the appellant. There were sufficient cross-references to the manual in the written contract of employment (in clauses 2 and 10 where compliance with company polices and/or procedures was referred to) for it to be concluded as a matter of law that the right to be heard (arising from the disciplinary procedures) was incorporated into the contract as a term of the contract. The respondent breached the contract by not giving a right to be heard prior to terminating the appellant’s employment. We therefore have no difficulty finding that the respondent is liable in breach of contract.”

(Underlining for emphasis)

RELIEF

6. In the relief sought in his Statement of Claim, the plaintiff seeks these damages:
   

“(a) Damages for wrongful dismissal;

(b) Income and all lawful entitlements for the balance of his contract;

(c) Special Damages;

(d) Damages for mental distress;

(e) Money in lieu of notice;

......”.

ISSUES

7. Is the plaintiff entitled to the damages claimed, and if so, what amount should be awarded?
   

EVIDENCE

8. The evidence in this hearing on damages comprised these affidavits tendered by consent:
   

For the plaintiff

• Affidavit of Tony Kabaru, Group Financial Controller for NSL, filed 1^st November 2013 (Exhibit P1); and
• Affidavit of the plaintiff filed 1^st November 2013 (Exhibit P2).
  

For the defendant

• Affidavit of Maureen Turagil, Accountant with NSL, filed 6^th March 2014 (Exhibit D1)
  

9. In his affidavit, the plaintiff confirms that six months into the Contract, he was advised by letter dated 18^th July 2005 that he was terminated “without notice’’ with the termination to take effect at COB that day. Three reasons were given for the termination:
   
   • (1) Unaccounted cash receipt totalling K6,900.00;
   • (2) Misconduct while under the influence of alcohol; and
   • (3) Misconduct bringing disrepute to the image of the company.
     
10. He produced a copy of the Contract.
    
11. He then gave instructions to his lawyer who filed this proceeding on 20^th July 2005.
    
12. There were communications with Tony Kabaru, who advised the defendant would settle the plaintiff’s claim with three months salary in lieu of notice, but that offer was refused.
    
13. By letter dated 8^th September 2005, the lawyers for the defendant advised that while the charges against the plaintiff warranted his termination under Clause 10 (of the Contract) NSL was willing to treat the termination (of 18^th July) as suspension and that termination would instead be made under Clause 9 (of the Contract) effective from receipt of the letter. That would then entitle the plaintiff to “three (3) months wages and entitlements plus accrued benefits”.
    
14. The plaintiff was asked to accept the “three (3) months wages and entitlements plus accrued benefits” and discontinue proceedings, but he declined.
    
15. The plaintiff further deposes in his affidavit that:
    
    • (a) he would have successfully defended the disciplinary charges against him;
    • (b) he suffered stress and mental distress following the termination;
    • (c) he lost out on earning K120,000 as annual bonus he would have received had he not been terminated;
    • (d) he lost the 24-hour use of a motor vehicle;
    • (e) he struggled to find alternative employment;
    • (f) he borrowed money to sustain himself and his family; and
    • (g) he borrowed money also to pay legal fees.
      
16. Tony Kubaru confirms in his affidavit that the plaintiff signed the Contract after his previous 2 years contract lapsed. An annual bonus of 10% of a target profit of K1.2million was agreed to in the new contract. For that purpose, an IBD bank account was opened for him to aim to deposit at least K100,000 a month to achieve the target.
    
17. Maureen Turagil’s evidence provides details of all payments made to the plaintiff from March 2003 to when he was terminated on 18^th July 2005, and other entitlements paid subsequent to termination.
    

DAMAGES

18. I address the different heads of damages claimed in relief.
    

Wrongful dismissal

19. An employer has the right to hire and fire his employees, and does not have to give reasons for his decision (Jimmy Malai v PNG Teachers Association [1992] PNGLR 568) unless the terms of a contract of employment provides otherwise (Ayleen Bure v Robert Kapo (2005) N2902)
    
20. Both parties agree that the law regarding damages in relation to unlawful termination of employment in a private setting is settled. In Porgera Joint Venture v Romin Kami (2010) SC1060, the Supreme Court held that in a wrongful dismissal case, the assessment of damages is restricted to the salary and other entitlement the employee was entitled to receive if the contract had been lawfully terminated under a notice period in the contract of employment. Supreme Court cases that have since approved the principles include Divine Word University v George Podas (2015) SC1414.
    
21. After a detailed analysis of the common law position in other jurisdictions, Injia CJ, who gave the leading opinion for the majority and with whom Gabi J agreed, in Porgera Joint Venture v Romin Kami, stated:
    

“24. I consider that the common law principles on compensation for want of notice and want of disciplinary procedures in a private employment contract developed in Gunton, Janciuk, Boyo, Focsa set out above are persuasive, appropriate and applicable to the circumstances of this country and apply them to the case at hand. Much of the principles set out above relating to measure of damages for want of notice are already part of the common law as adopted and applied in this jurisdiction in many cases including the cases cited by counsel before us. The principles on compensation for want of compliance with disciplinary procedures in a private employment contract is new and requires further development and refining in subsequent cases with assistance of counsel.

25. I consider that in a private employment situation where an employee is employed under a written contract of employment for a fixed term and which contains a termination clause for termination with or without notice by either party, with or without reason, the measure of damages which the employee is entitled to receive is based on the salary and other entitlements that the employee would have received if the contract had been lawfully terminated. In a case where it is an express or implied term of the contract that termination of the employment contract for cause would be effected upon compliance with disciplinary procedures, the measure of damages is assessed on a reasonable period within which the disciplinary proceedings would be commenced and concluded. The likely outcome of the disciplinary proceeding is immaterial or is an irrelevant consideration.”

(Underlining for emphasis)

22. As to what would be “a reasonable period within which the disciplinary proceedings would be commenced and concluded”, his Honour proposed at [23] that if the court assessed the disciplinary process would take longer than the notice period, additional damages could be awarded for the period in excess of the notice period.
    
23. While the defendant urged the court to award damages consistent with the principle stated in Porgera Joint Venture v Romin Kami, the plaintiff submitted otherwise.
    

Balance of contract

24. The plaintiff’s submissions effectively asked the court not to consider the contractual provisions relating to notice.
    
25. It was argued that because the letter of termination did not refer to either Clauses 9 or 10 of the Contract which provide for notices or payments in lieu, the defendant must be taken to have waived those provisions and opted instead to prove its case, failing which, the plaintiff was entitled to be paid the balance of the Contract.
    
26. I consider this a misconceived submission without substance. No cases were cited in support of the proposition that the law settled by the Supreme Court should be disregarded.
    
27. It is plain that the charges levelled against the plaintiff were “serious and wilful misconduct” which under Clause 10 allowed NSL to terminate without notice. Although the Clause was not cited, I have no doubt the plaintiff acted under this provision of the Contract. After the plaintiff filed this proceeding, he defendant through its lawyers offered a compromise to settle the plaintiff’s claim by suggesting the termination be effected anew as one made pursuant to Clause 9. A termination under this provision would entitle the plaintiff three months pay in lieu of notice, a better outcome than that from a Clause 10 termination.
    
28. Under the Contract, the plaintiff’s employment could be terminated in these ways:
    
    • By either party giving not less than three months notice or pay in lieu (Clause 9)
    • By the defendant giving one month notice or pay in lieu, for reason of poor performance and/or discipline (Clause 10)
    • Immediately without notice for a serious breach of the terms of employment or for serious and wilful misconduct (Clause 10)
    • Without notice or pay in lieu in prescribed circumstances (Clause10)
      
29. The defendant was entitled to terminate under Clause 9 and had that been properly done, the plaintiff would have been entitled to three months’ notice or be paid salary and entitlements for that period in lieu of the notice.
    
30. To my mind, the change by NSL from purportedly acting under Clause 10 to applying Clause 9 is of no consequence.
    
31. Whether or not the disciplinary charges would have been sustained is also irrelevant.
    
32. I am not convinced by the plaintiff’s submissions that I should not apply the principles enunciated in Pogera Joint Venture v Romin Kami.
    

Salary and entitlements

33. The plaintiff seeks salary and following entitlements contained in the Contract:
    

34. In my opinion, the disciplinary proceeding from start to end, would have completed within the notice period of three months.
    
35. I will therefore award damages for that period only, being salary and other entitlements:
    
    • (1) According to NSL, the plaintiff was paid K2,115.39 per fortnight. Three months salary is K12,692.34. He was paid K7,841.41, which means the plaintiff is still owed K4,450.93.
    • (2) Under the Superannuation (General Provisions) Act, employer and employee contributions are payable to the superannuation fund, in this case Nasfund. It is not a payment made to the employee.
    • (3) Bonus is payable on achieving an annual profit target. The plaintiff only worked for 6 months.
    • (4) In relation to leave fares and repatriation, the plaintiff did not offer any calculation of what is owed to him. NSL provided evidence that the plaintiff was paid K3,173.08 (annual leave pay), K5,373.00 (air fares for family), and K1,100.00 (excess baggage). There was also evidence of another payment of K9,854.34 for annual leave airfares, but that was in 2003 and no doubt related to his previous contract.
    • (5) Accommodation was paid for by the company. Again, the plaintiff did not offer any evidence of what is owed to him. However, accommodation was not a cash benefit payable to the plaintiff. Evidence by NSL is that rental accommodation was paid up to September 2005.
    • (6) A motor vehicle was also provided by the company. The plaintiff did not present any evidence to support his claim for loss suffered by the not having the use of the vehicle. But again, vehicle use was also not a cash benefit payable to the plaintiff.
    • (7) In relation to school fees for his children, the plaintiff claimed it cost him K10,260 for the year. He did not produce any receipt to claim reimbursement, nor did he produce invoices to claim payment. NSL presented evidence that school fees were paid for 2004 (K4,265.09) and for 2005 (K5,364.00). The 2004 payment was no doubt made under the previous contract.
    • (8) The plaintiff’s claim of K10,000 as loss of medical benefits is misguided. Under clause 12, NSL maintained medical and death insurance cover of K10,000 for the benefit of its employee. That is not an entitlement due to the plaintiff in cash.
    • (9) Sick leave is not a monetary entitlement.
    • (10) Compassionate leave is also not a monetary entitlement.
      
36. It follows that the plaintiff is only entitled to damages of K4,450.93, for unpaid salary.
    

Special damages

37. While special damages are sought, no particulars of this claim are pleaded, and there is very little evidence in support. While the plaintiff claimed in submissions that he obtained loans totalling K76,460.25, no particulars of the loans are provided, and as to evidence, the plaintiff simply states in his affidavit that he borrowed money to meet family needs and his legal costs.
    
38. No award is made under this heading.
    

Mental distress

39. This claim is also not particularized in the pleadings. As regards evidence, the plaintiff states at [32] and [33] of his affidavit that the allegations made against him affected him mentally and emotionally, and that he was hospitalized for a few days. That is all.
    
40. In The Central Bank of PNG v Gabriel Tugiau (2009) SC1013, the plaintiff failed in his claim for damages for psychological effects, stress, embarrassment, and shame because he failed to properly particularize the claim, and he did not present evidence in support of the claim.
    
41. For the same reasons, I do not award any damages under this heading. The relief has no proper foundation in the pleadings, and the plaintiff has not produced the relevant evidence in support.
    

Money in lieu of notice

42. This claim was not pursued for the obvious reason that payment for the balance of the contract was urged instead.
    

CONCLUSION

43. Total damages awarded to the plaintiff is K4,450.93, being the balance due for salary for three months that should have been paid in lieu of notice.
    
44. The plaintiff claimed salary for the balance of the Contract which has been refused. As all the other damages claimed have also been declined, I consider that the plaintiff should pay the defendant’s costs of this hearing. Further, while the plaintiff succeeded in the trial on liability, his entitlement as to damages is essentially what was offered to the plaintiff from the beginning. In the appeal in respect of this case, the Supreme Court at [123] after citing Pogera Joint Venture v Romin Kami, remarked that “it is questionable whether the appellant would be entitled to anything in addition to salary and other entitlements in the notice period (which in this case would appear to be three months). These issues would need to be fully argued before the National Court”. Despite this seeming hint from the Supreme Court, the plaintiff pursued his claim for damages for the balance of the contract. In those circumstances, I exercise my discretion and award interest of 4%, being half the rate usually applied, which shall accrue on the judgement sum from the date of filing the proceeding.
    

ORDER

45. I order that:
    
    • (1) The plaintiff is awarded damages of K4,450.93.
    • (2) Interest at 4% shall apply on the judgement sum from the date of the filing of this proceeding (20^th July2005) until it is settled.
    • (3) The plaintiff shall pay the defendant’s costs of this trial on damages.
    • (4) Time for entry of this order is abridged to the date of settlement by the Registrar which shall take place forthwith.

________________________________________________________________
Stevens Lawyers: Lawyer for the Plaintiff
Allens Lawyers: Lawyer for the Defendant