N11687

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

WS 523 OF 2022

BETWEEN:
TAN HENG HUAT
Plaintiff

AND
MATTHEW LEWIS
First Defendant

AND
HORNIBROOK NGI LIMTED
Second Defendant

LAE:  DOWA J
4 APRIL, 6 AUGUST 2024; 30 JANUARY 2026

EMPLOYMENT LAW - breach of employment contract of non-citizen under written terms and conditions -minimum terms and conditions governed by Employment Act- principles applicable in termination of written contract of employment-Where the contract of employment is terminated based on the terms of the contract, the employer is obliged to follow that procedure and not to revert to subsequent conduct brought on by failure to keep the terms or separation. Judgment for the plaintiff.
Cases cited

Porgera Joint Venture -v- Robin Kami (2010) SC1060
Jonathan Mangope Paraia v The State (1995) N1343
Ruhuwamo v PNG Ports Corporation (2019) N8021
 John Murua v Ramu Nico Management (MCC) Ltd (2013) N5092 
Tand v Newcrest Mine Ltd (2020) N8616
Waranaka v Dusava (2009) SC940

Counsel

 J. Topa for the plaintiff 
 J Kaki for the defendants 

JUDGMENT 

1.	DOWA J. This is a judgment on both issues of liability and damages.

 Background Facts

2.	The Plaintiff is a former employee of Hornibrooks NGI Limited, the second Defendant. He was employed under a written contract of employment. He was terminated from employment on 3rd October 2016. Plaintiff alleges, on termination, he was entitled to be paid K 156,501.70 in salaries and outstanding entitlements. He was paid only K 78,250.85 with a promise that the balance of K 78,250.85 would be paid a month later. The Plaintiff alleges that he was not paid the balance and has instituted the current recovery proceedings. 

The Defendants’ Defence

3.	The Defendants filed a Defence, denying the claim. Defendants pleaded that the Plaintiff was terminated for cause for misconduct and negligence. 

Trial 

4.	By consent, the trial was conducted by tender of affidavits followed by written submissions. 

Evidence

5.	The Plaintiff relies on the following affidavits:
a.	Affidavit of Tan Heng Huat filed 19th December 2022-Exhibit P1
b.	Affidavit of Tan Heng Huat filed 19th June 2023-Exhibit P2
c.	Affidavit of Tan Heng Huat filed 19th June 2023-Exhibit P3
d.	Affidavit of Avelina Tabernilla 19th June 2023-Exhibit P4
6.	This is the summary of the Plaintiff’s evidence. The Plaintiff is a citizen of the Republic of Malaysia. He is an accountant by profession. Plaintiff was employed by the second Defendant as Chief Financial Officer under a contract of employment signed 9th February 2011. Plaintiff was terminated on 3rd October 2016. Plaintiff deposed he was unlawfully terminated. On termination he was entitled to K 150,501.71 for three months’ pay in lieu of notice and outstanding leave and other entitlements. On 5th October 2016 his entitlements were calculated, and he was paid K 78. 250.85, the first half. Defendants, especially Malcholm Lewis, the Chairman of Hornibrooks, promised the balance of K 78, 250.85 woud be paid on 8th November 2016. The balance was not paid. When Plaintiff enquired with the Defendants, he was advised he would be paid on 3rd January 2017. They did not pay the balance. They did not pay for the repatriation tickets for him and his wife who was also terminated. Instead of paying them the Defendants accused the Plaintiff of breaching confidentiality clause in the employment contract and accused him of stealing their work permit and referred him to the Immigration and Police in Lae. Plaintiff was also accused of not returning company issued mobile phone. On 31st October 2016, Plaintiff was arrested by Police, but no charge was laid after police noted lack of evidence. Immigration dropped their investigation after they found the work permit was not stolen. On 21st December 2016, Plaintiff was charged for verbal assault and threats on one Anthony Whitfield, the Chief Operating Officer of the second Defendant. His passport was seized by police. The case was dismissed on 16th January 2017. Plaintiff was again charged under the NICTA Act for using threatening words on Anthony Whitfield. He was committed to the National Court. He was discharged on 14th August 2017 by the National Court after the Public Prosecutor presented a Nolle Prosequi.

7.	Plaintiff deposed that because of the intimidation, and the false accusations and criminal charges, he suffered physically, emotionally and financially. He suffered a stroke and costed him substantially in medical and travel expenses which amounted to K 40,000.00. It has also cost him about K 41,000.00 in legal fees.  The Plaintiff is now claiming the balance of his entitlements and damages and financial loss.

Defendants’ evidence

8.	The Defendants rely on the following affidavits:
a.	Affidavit of Malchom Lewis filed 24th April 2024-Exhibit D1
b.	Affidavit of Malchom Lewis filed 28th July 2023-ExhibitD2
c.	Affidavit of Malchom Lewis filed 28th July 2023-Exhibit D3
d.	Affidavit of Mathew Lewis filed 24thth April 2023 Exhibit D4
e.	Affidavit of Mathew Lewis filed 24th April 2023 Exhibit D5
f.	Affidavit of Mathew Lewis filed 26th July 2023 Exhibit D6

9.	This is the summary of the Defendants’ evidence. The Plaintiff was terminated with cause for continued negligence and gross misconduct, allied with manipulating with the company’s accounting software. This involve manipulating of the Pronto Accounting system making it difficult for Managers to have access to project financial performances. Plaintiff also disbursed more money within a short period well below the normal credit limit with suppliers. Defendants allege Plaintiff was performing below competence level and was terminated for gross misconduct.

10.	 Malcolm Lewis, Chairman of the second Defendant deposed that despite the misconduct, the defendants offered the Plaintiff an easy and friendly separation of the parties in a manner that would not reflect poorly on his future employment opportunities, and so he was offered three months’ notice provided he behaved himself and abide by the non- disclosure agreement. Plaintiff agreed to this and he was paid half of the entitlements. His wife was also terminated from employment on the same day. Plaintiff breached the conditions by refusing to leave the country and attempted to enter the company premises. Defendants discovered that Plaintiff attended on IRC and IPA discrediting the Defendant company. He was also pursuing his PNG Permanent Residency application. The Defendant then engaged the state officials to track down the Plaintiff to be issued their travel tickets as their continued stay was illegal. Defendants attempt to get the Plaintiff to leave the country met with threats to Chief Operating Officer Anthony Whitfield. In early November 2016, Plaintiff eventually left on his own despite the second Defendant still having his travel tickets. Plaintiff returned to the country a few weeks later and demanded payment of his entitlements. 

11.	The Defendant then reverted the termination into summary dismissal for gross misconduct and refused to pay the balance of the entitlements.  The telephone threats on Mr. Whitfield resulted in criminal proceedings brought against the Plaintiff, which the Defendants are not answerable. The Defendants refuted the Plaintiff’s claim that he suffered a stroke because of the Defendants conduct, deposing that they are not responsible.
Issues

12.	The issues for consideration are:

a.	Whether the Plaintiff is entitled to the balance of his entitlement of K 78, 250.85.
b.	Whether the Plaintiff is entitled to reimbursement of his legal costs
incurred in defending criminal proceedings

c.	Whether the Plaintiff is entitled to general damages for pain and suffering and associated costs and financial loss.
Law

13.	The relevant law is the Employment Act that governs employment relations in Papua New Guinea. The Act sets out the minimum requirements for contract for service.  In the present case, the Plaintiff had a written contract of service. Sections 19 (a), 22, 33, 34, 35, and 36 of the Employment Act are relevant and applicable.  Sections 33 -36 read, and I quote:

33.	TERMINATION OF CONTRACTS.
	(1) 	A contract of service for a specified time or for specified work shall, 	unless terminated otherwise under this Division, terminate when the period of time for which the contract was made expires, or the work 	specified in the contract is completed.
	(2) 	A contract of service for an unspecified period of time shall be deemed to continue until terminated by either party under this Division.
34.	NOTICE OF TERMINATION.
	(1) 	This section does not apply to a written contract of service 	for the first 	two years of operation of the contract unless the parties to the contract 	agree otherwise.
	(2) 	Subject to this Act, a party to a contract of service may, at any time, 	give notice to the other party of his intention to terminate the contract.
	(3) 	The length of notice of intention required to terminate a 				contract of service shall be the same for both parties and–
		(a) 	shall be as specified in the contract; or
		(b)	 shall be not less than the periods specified in 						Subsection (4).
	(4) 	Where there is no provision in a contract of service for 				notice of intention to terminate, the length of the notice shall 			be not less than–
		(a) 	one day’s notice if the employee has been employed 					for less than four weeks; or
		(b)	 one week’s notice if the employee has been employed 				for not less than four weeks and for less than one 					year; or
		(c) 	two weeks’ notice if the employee has been employed 				for not less than one year and for less than five years; 				or
		(d) 	four weeks’ notice if the employee has been employed 				for five years or more.
	(5) 	Notice of termination shall be given–
		(a)	 in the case of a contract of service referred to in 					Section 19(a)– in writing; and
		(b) 	in the case of any other contract of service–either 						orally or in writing,
			and the day on which the notice is given shall be 					included in the period of notice.”
35.	TERMINATION OF CONTRACT WITHOUT NOTICE.
		(1) 	An employer and an employee may mutually agree to terminate a 				contract of service with or without notice.
(2) 	Where a party to a contract has given notice of intention to terminate under Section 34, either party may, without waiting for the expiry of that notice, terminate the contract by paying to the other party a sum equal to the amount of salary that would have accrued to the employee during the period of the notice.
                         …………
	36.	GROUNDS FOR TERMINATION OF CONTRACT.
(1) 	An employer may terminate a contract of service without notice or payment instead of notice–
			(a) 	where the employee–
				(i) 	wilfully disobeys a lawful and reasonable order; or
		(ii) 	misconducts himself by an act of omission or 	commission that is inconsistent with the due and faithful discharge of his duties; or
				(iii) 	is guilty of a fraud or dishonesty; or
				(iv) 	is habitually neglectful of his duties; or
				(v) 	is imprisoned for a period exceeding seven days; or
(vi) 	is continually absent from his employment without leave 	or reasonable excuse; or
(vii) 	is convicted of an offence or contravention of this Act or any other law relating to employment; or
(b) 	on any other ground on which he would be entitled to terminate the contract without notice at common law.
		(2) 	An employee may terminate a contract of service without notice–
(a) 	if the employer or a person acting or purporting to act on his behalf or by his authority–
(i) 	induced him to enter into the contract by force, fraud or a statement that was misleading in any material particular relating to the employment; or
				(ii)	 has been convicted of an offence against or a 						contravention of this Act or any other law relating to 					the employee or his dependants; or
				(iii) 	has been negligent or careless in the discharge of his 					duties towards the employee or his dependants under 					the contract, this Act or any other law; or
(iv) 	has committed an act of omission or commission that is Inconsistent with the due and faithful discharge of his obligations towards the employee or his dependants; or
				(v) 	has ill-treated the employee; or
(b) 	on any other ground on which he would be 		entitled to terminate the contract without notice 		at common law.
(3) 	Termination of a contract of service under Subsection (1) or (2) shall be made as soon as practicable after the happening of the event on which the termination is based.
		(4) 	This Act does not prevent termination of a contract of service under 			this section being the subject of an industrial dispute under 					the Industrial Relations Act 1962.”

14.	The employment law is settled in this jurisdiction as exemplified in the following cases.

15. In Porgera Joint Venture -v- Robin Kami (supra) Injia CJ, (as he then was) said this at paragraphs 25- 26 of the judgment:

“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 mine)

26…. But damages will not be for the balance of the contract unless the parties agree to such a term under the contract. Instead, damages is for the reasonable period during which proper disciplinary process would have been initiated and concluded in accordance with any time lines prescribed for various steps in the disciplinary procedure to be concluded. For a start, it would very much depend on the steps in the procedures set out in the disciplinary process and the time limit, if any, prescribed for various procedural steps where they are no time limits prescribed, it would come down to assessing what would be as reasonable time frame to cover the main steps in the process – formulating and presenting complaint, opportunity to reply and a decision made and communicated to the employee and any provisions for appeal or review from that decision by a higher management body or person. It is not a matter for the Court to analyze and speculate on the employee’s chances of success if the process was completed.

16. In Ruhuwamo v PNG Ports Corporation (2019) N8021, Thompson J said this at paragraph 17-19 of her Judgement:

“17.	 It is well settled by a long line of case authorities in PNG, that an employer has 	the right to hire and fire his employees and does not have to give reasons for 	his decision. If this is done in breach of the terms of a contract, the measure of 	damages is what the employee would have received for his salary and other 	entitlements if the contract had been lawfully terminated. (See Jimmy Malai v PNG Teachers Association (1992) PNG LR 568, Paddy Fagon v Negiso Distributors Pty Ltd (1999) N 1900, New Britain Palm Oil Ltd v Vitus Sukuramu (2008) SC 946, and Porgera Joint Venture Manager Placer (PNG) Ltd v Robin Kami (2010) PGSC 11).
18. 	This is consistent with the provisions of the Employment Act. Under S 34, a contract of employment may be terminated at any time, with the length of notice being either as specified in the contract, or dependent on the length of the employment. If an employee has been employed for over five years, the length of notice shall be not less than four weeks. Under S 35, the termination may be by notice, or by payment in lieu of notice.
19. 	Under S 36, the employer may terminate without notice or payment in lieu, if the employee, inter alia, wilfully disobeys a lawful and reasonable order or misconducts himself by an act of omission or commission that is inconsistent with the due and faithful discharge of his duties.”
17. 	In John Murua v Ramu Nico Management (MCC) Ltd (2013) N5092   Cannings J, stated that: “There is no binding principle of law that in assessing damages, the National Court is obliged to award nothing more than the amount of salary that would have been paid to the employee during the notice period.” His Honour proceeded to award general damages assessed at a week’s salary in that case.

18.	In Tand v Newcrest Mine Ltd (2020) N8616, His Honor Makail J set out certain principles that should apply when assessing damages for breach of employment.  These principles appear in the head note of the judgment which read:
“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.

(c)	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.”

a.	Whether the Plaintiff is entitled to the balance of his entitlement of K 78, 250.85.

19.	The Plaintiff was terminated on 3rd October 2016 with pay in lieu of three (3) months’ notice. Plaintiffs’ entitlements were calculated which amounted to K 156,501.70. He was paid half and the balance of K 78,250.85 was retained with a promise that it would be settled on 8th November 2016. It was not paid. When Plaintiff enquired, he was told it would be paid 3rd January 2017. Again, it was not paid.

20.	The Defendants explained they decided not to pay the balance because the Plaintiff failed to adhere to the conditions stated in the letter of termination. The Plaintiff was instructed not to contact employees, suppliers or customers of the second Defendant, nor to disclose anything as related to the company breaching the confidentiality clause of the contract. The Defendants stated further that the Plaintiff breached the conditions of the termination letter by attending on IRC and IPA offices, discrediting the Defendant company. Claiming the breach of the confidentiality clause, the Defendants reverted the termination into summary dismissal for gross misconduct and refused to pay the balance of the entitlements.  The Defendant contended Plaintiff was terminated with cause for continued negligence and gross misconduct, allied with manipulating with the company’s accounting software. This involve manipulating of the Pronto Accounting system making it difficult for Managers to have access to project financial performances. Plaintiff also disbursed more money within a short period well below the normal credit limit with suppliers. Defendant alleged Plaintiff was performing below competence level and was terminated for gross misconduct.

21.	Plaintiff refuted the claims by the Defendants alleging that he was terminated because he was suspected of being the whistle blower in reporting to the shareholders of misuse of funds by the first Defendant, and that he did not breach the confidentiality clause of the employment agreement.

22.	There are two versions of the facts. The Supreme Court in Waranaka v Dusava (2009) SC940 held that where there are two versions in evidence, it is important to assess and analyse the credibility of the witnesses and their evidence and point out any aspect of the performance of each witness before accepting the evidence. The deponents to the various affidavits relied on by the parties were not cross examined. The Court will apply common sense and logic based on proven facts.

23.	Most of the disputed evidence presented related to events that transpired either prior to or after the termination of employment on 3rd October 2016. What is undisputed is Plaintiff was terminated in writing by letter dated 3rd October 2016. Although the Defendants contend Plaintiff was terminated for misconduct, that was not stated in the letter of termination. I note Malcholm Lewis’ evidence that Plaintiff was verbally informed of the reasons but that lacks weight in the light of the fact that the reasons for termination were not set out in the letter of termination.

24.	The letter of termination expressly stated that the Plaintiff would be paid three months salary in accordance with the employment contract in lieu of notice. The total salary and entitlements due to the Plaintiff as of 5th October 2016 was K 156,501.70. He was paid K 78,250.85 and was promised he would be paid the balance on 8th November 2016. No reasons were given for the delay in settling the balance. Apart from that the Defendants did not provide the repatriation tickets for the Plaintiff and his wife. They paid their own tickets. Although the Defendants contended that they had the tickets, no evidence was produced to corroborate their testimony, especially where the Plaintiff left the country a month after the termination.

25.	The Defendants contended that the Plaintiff breached the terms of the confidentiality agreement. However, there is insufficient evidence to establish what the Plaintiff did or said that discredited the second Defendant company. On the other hand, Plaintiff suffered frustration over the delay in settlement of his salary. He was not provided the repatriation tickets. He was accused of stealing phone and other company property which was not pursued further. He was accused of stealing work permit with the engagement of the State Officers to hasten the repatriation which proved baseless. He was reported to the police initially for company property theft and subsequently for verbal threats, culminating in the arrest and the laying of criminal charges which was eventually nollied. All these would have been avoided had the Plaintiff been paid on the day of termination.

26.	Plaintiff was to be paid out in lieu of three months notice. That means he should have been paid out on the day of termination, not weeks or months later. That is the intention of the parties and the spirit of the Employment Act. The Defendants were unreasonable in withholding the payments and the repatriation tickets. The Defendants were unreasonable in changing the status quo by reverting the termination into summary dismissal for misconduct several weeks after the termination.
 
27.	For the foregoing reasons, I find the Defendants liable to pay the balance of the salary in the sum of K 78,250.85.

b.	Whether the Plaintiff is entitled to reimbursement of his legal costs incurred in defending criminal proceedings
28.	The Plaintiff claims more than K 40,000.00 being legal fees he paid to lawyers who defended various criminal charges brought against him. Except for the allegations of stolen work permit, and mobile phone, the criminal charges were for alleged threats made to Anthony Whitfield, an employee of the second Defendant. Mr Whitfield and police are not parties to the proceedings. Although the evidence shows, the first Defendant was involved in reporting the matter to police, police are independent and are not subject to control and direction of the Defendants. Secondly there is no pleading on malice or malicious prosecution before the Court would delve into this issue of costs. I am therefore not satisfied that the Defendants are liable to reimburse the Plaintiff the payments he made for legal representation.

c.	Whether the Plaintiff is entitled to general damages for pain and suffering and financial loss

29.	Plaintiff submitted that he is entitled to damages for pain and suffering, financial and medical expenses. General damages are for pain, suffering, humiliation, distress, and inconvenience. General damages are not readily awarded in unlawful termination of employment contracts. However inappropriate cases, damages can be awarded. In the present case, the Plaintiff submitted he suffered a stroke brought on by the false prosecution of the criminal cases against him. He provided a medical report from Pentai Hospital. Republic of Malaysia. He provided evidence of the criminal charges and the final orders from the Court. He provided evidence of the legal fees that were charged. It is clear the criminal charges which commenced in January 2017 were eventually finalized in August 2017. During that period, the Defendant suffered losses in earnings. The Plaintiff is entitled to damages for psychological loss, frustration, financial loss, anxiety, and inconvenience. This suffering is a direct consequence of the Defendants’ conduct in failing to pay his entitlement on or immediately after the termination of his employment. 

30. The Plaintiff submitted for a sum exceeding K 1 million which includes malicious prosecution and unlawful termination and financial loss. I reject the amount submitted. The amount is not properly pleaded in the statement of claim. While it is not easy to quantify the loss, the Plaintiff should not be left without a remedy for the pain and suffering he went through. 

31.	In Jonathan Mangope Paraia v The State (1995) N1343, Injia J, as he then was, said the fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages. Where precise evidence is available the court expects to have it. However, where it is not, the Court must do the best it can. 

32.	I have considered these factors in determining the amount: there was a breach of his employment contract by the non-settlement of his salary, the criminal accusations, lying of criminal charges, the physical and mental stress and financial loss, failure to pay their return tickets, all brought about because of the failure by the Defendants in keeping their end of the bargain. In my view the appropriate and reasonable amount shall be K30,000.00. An award for that sum shall be made.

Special Damages

33.	The Plaintiff did not plead any claim for special damages and thus will be entitled to any award.

Total claim  

34.	The total amount shall be K 108, 250.85.

	Interest

35.	The Plaintiff claims interest at 8%. Interest at 8% on K 108,250.85 from date of filing of Writ (04/11/2022) to date of judgment (30/01/2026) for 1,182 days is K 28,044.39. Interest is calculated as follows:

•	K 108,250.85 x 8% =                  K 8,660.07 per annum
•	K 8,660.07 ÷ 365 days 	= 	K 23.73 per day
        K 23.73 x 1,182 days	=	K 28,044.39

36.	. The total judgment shall be K 136,295.24.

COST

37.	Generally, costs follow the event. Plaintiff succeeded in his claim and thus is entitled to the costs.
Orders
      38.      The Court orders that:

1.	Judgment is entered for the Plaintiff in the sum of K 136,295.24 inclusive of interest.
2.	Post judgment shall accrue at the rate of 8 % until settlement.
3.	The Defendants shall pay the costs which shall be taxed if not agreed.
4.	Time is abridged.
____________________________________________________________________
Lawyers for the plaintiffs: Miles Legal Services
Lawyer for the defendants: Joel Kaki, employed lawyer for the defendants