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Anio v Baliki [2004] PGLawRp 35; [2004] PNGLR 504 (12 November 2004)

NATIONAL COURT OF JUSTICE

PAMA ANIO

V

AHO BALIKI; AND
BANK SOUTH PACIFIC

WAIGANI: KANDAKASI J

12 November 2004

EMPLOYMENT LAW – Written contract of employment – Terms of contract dictate the rights and duties of the parties to the exclusion of extrinsic evidence - Dismissal for cause but not disclosed at time of dismissal – Employer's right to terminate without reasons – Employer could terminate without reason and provide one later – Discovery of employee facilitating a fraud against employer – Serious misconduct and breach of fiduciary duty – Instant dismissal warranted - Termination found lawful.

DAMAGES - Claim of unlawful dismissal – General damages and damage for distress and frustration - Plaintiff under obligation to plead with sufficient particulars and establish claim within terms of the written contract by appropriate evidence – Failure to do so – Effect of – No award of damages.

Facts

The plaintiff is claiming damages allegedly for wrongful dismissal of his employment contract with the defendant Bank ("the Bank"). He claimed arbitrary termination and without cause or in breach of a contract of employment. He claimed that his measure of damages for the balance of his contract as well as a value of a house he purchased under a loan from the Bank. He is also claimed damages for distress and frustration. The Bank denied the claim.

Held

1. Generally where parties have reduced their agreement in case of an agreement into writing the document should be allowed to speak for itself. No extrinsic evidence can be allowed to add to, subtract from or contradict what is stated in the document. Igiseng Investments Limited v Starwest Constructions Limited and Igiseng–Okmanip Business Group Inc (17/12/03) N2498; Curtain Brothers (QLD) Pty Ltd & Kinhill Kramer Pty Ltd v. The Independent State of Papua New Guinea [1993] PNGLR 285; Odata Ltd v Ambusa Copra Oil Mill Ltd (06/0701) N2106 and Papua New Guinea Forest Authority v. Concord Pacific Limited, Paiso Company Limited and The Independent State of Papua New Guinea (N0.2) (12/09/03) N2456

2. There is no pleading or any evidence of the parties in the present case varying the contract in accordance with clause 32 of the contract.

3. The Bank lawfully dismissed the plaintiff following discovery of him facilitating a fraud against it.

4. The law should only compensate those caused to suffer by the very mode of termination adopted by an employer that is clearly unlawful and does result in some proven damage or negative mental and physical impact on the dismissed employee, supported by appropriate medical or such other evidence.

Papua New Guinea cases cited

Ereman Ragi & The POSF Board v. Maingu [29/06/94] SC459.
Harding v. Teperoi Timbers [1988] PNGLR 128.
Igiseng Investments Limited v. Starwest Constructions Limited and Igiseng–Okmanip Business Group Inc (17/12/03) N2498.
Legu Vagi v. National Capital District Commission (03/08/02) N2280.
Leo Nuia v. The State (29/08/00) N1986.
Mathew Petrus Himsa and Napao Namane v Richard Sikani, Commissioner of Correctional Services & The State (08/11/02) N2307.
Nahau Rooney v. Forest Industries Council [1990] PNGLR 407.
Naguwean v. The State [1992] PNGLR 367.
Nazel Wally Zanepa v. Ellison Kaivovo, & The State (02/11/99) SC623.
Paddy Fagon v. Negiso Distributors Pty Ltd (10/06/99) N1900.
Peter Aigilo v. Sir Mekere Morauta & Ors (15/06/01) N2102.
PNGBC v. Jeff Tole (27/09/02) SC694.
Teio Raka Ila v. Wilson Kamit & The Bank of Papua New Guinea (11/10/02) N2291.
The Supreme Court judgment in Post PNG Ltd v. Yama Security Services Ltd (unreported and unnumbered judgment delivered on 26th July 2001) in SCA 80 of 2000
Tom B Gesa v. Bernard Kipit City Manager National Capital District Commission & NCDC (06/08/03) N2457.
Wilson Thompson v Bernard Kipit & NCDC (11/10/04) N2686.

Other cases cited

Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; [1991] 66 ALJR 123.
Lucy v Commonwealth [1923] HCA 32; [1923] 33 CLR 229.

Counsel

L. Manua, for the plaintiff.
A. Mana, for the defendants.

12 November 2004

Kandakasi j. The plaintiff's is claiming damages allegedly for wrongful dismissal of his employment contract with the defendant Bank ("the Bank"). He claims that, his termination was arbitrary and without cause or in breach of a contract of employment dated 20 October 1999 for a three years term ("the contract"), without prior notice and warning and was in breach of the Bank's own Code of Conduct. He therefore claims that his measure of damages should be for the balance of his contract as well as a value of a house he purchased under a loan from the Bank. He is also claiming damages for distress and frustration.

The Bank denies the claim and says it dismissed the plaintiff for cause, namely accepting a commission to facilitate a fraud against it by a third party. As such, the termination was lawful. Further, the Bank says, its Code of Conduct was not part of the contract. Therefore, it was not bound to accord the plaintiff the staff discipline and or termination procedure setout in it. In the circumstances, it says the plaintiff is not entitled to any damages. Furthermore or in the alternative, it says, even if the termination was unlawful, it paid the plaintiff what was due to him upon termination and so therefore, there is no basis for the claim for damages.

These arguments demonstrate the issues for determination in this case. The main issues are thus:

1. Were the Bank's staff Code of Conduct part of the contract between itself and the plaintiff?

2. Was the termination of the contract unlawful?

3. If the termination of the contract was unlawful, what are the plaintiff's damages, if any?

The Relevant Evidence

The relevant evidence comes for the plaintiff from his own affidavits sworn on 25 June 2002 and filed on the 28 June 2002. The Bank's evidence comes from Ms. Aleena Bird's affidavit sworn and filed on 4 November 2003.

Relevant Facts

From these evidences, the facts are mainly not in dispute. In October 1999, the plaintiff successfully applied for a job as Assistant Manager with the then Papua New Guinea Banking Corporation, now the Bank with its Multi Media section.

According to the plaintiff, the Bank gave to him during the course of his employment a Code of Conduct which he claims governed the Bank's procedure for dealing with disputes and all disciplinary matters with its employees. The plaintiff claims that the Code of Conduct formed part of the terms and conditions of his employment with the Bank.

During the currency of his employment, the plaintiff applied for and the Bank granted a housing loan to the plaintiff under its staff housing loan scheme, to purchase a house at Allotment 13, Section 256, Hohola. The loan had a repayment period of up to 15 years, by which time, the plaintiff would retire.

Before October 2001, the plaintiff says he became suspicious of the activities of the Marketing Department and alerted the Management resulting in investigations. In October 2001, one of the Bank's employees, a Duncan Smith, interviewed the plaintiff over his receipt of a sum of K100.00 from the Head of Marketing Department and about a bank account operated by the social club of the Marketing Department. The plaintiff informed Duncan Smith that he was not aware of the bank account but confirmed receiving K100.00 from the Head of Marketing Department. He told Mr. Smith that he thought the money was his Christmas bonus from the Bank and accepted it.

By letter dated 12 November 2001, the Bank under the hand of Mr. Aho Baliki, then Managing Director of the Bank, informed the plaintiff that if there are any further breaches of the Code of Conduct, regardless of however minor it may be, that would form the basis for a termination of his employment. In the following month, December 24 2001, the Bank terminated the plaintiff's employment contract, without any reason but subsequently it claimed that the plaintiff committed a serious breach of his duties in that it facilitated a fraud against it in return for a commission. The termination ended the Contract 9 months short of the plaintiff's full term of 3 years.

The plaintiff claims his termination was sudden and unexpected that it shocked and caused him distress because it came without a disciplinary charge, hearing him and a finding of wrong doing. He goes on to say, the fact that his termination came about on the eve of Christmas worsened the situation because it disrupted his family's Christmas celebration plans.

Since his termination, the plaintiff says he tried every opportunity to secure alternative employment with other banking and financial institutions without success. He has since fallen sick, lost his appetite to eat and overtaken by distress following his failure to secure a similar job on same or similar terms and conditions of employment. This, he says, was due to the way and the manner in which the Bank terminated his employment. Eventually, however, he managed to get a job with the National Newspaper as a Training Coordinator on a fortnightly salary of K600.00.

Further, prior to his termination, the Bank informed the plaintiff that on 13 November, his loan was in arrears and that he should repay the loan and enter into a non-staff housing loan arrangement whereby interest and repayment rates would increase. On 15 April 2002, the plaintiff informed the Bank that he was earning K600.00 a fortnight only and that he would repay the arrears and loan bit by bit. By letter received by the plaintiff on 24 April 2002, the Bank asked him to provide an update of his finances. Five days later, the plaintiff on 29 April, asked the Bank to give him time to repay. However, on 4 June 2002, the plaintiff received a letter of demand from the Bank demanding a payment of K143,499.11 his total debt owing on his loan account. The plaintiff says this shocked him and he became fearful and distressed because his family occupied the house, the subject of the loan would become displaced by what was happening. However, as at the time of the trial, the Bank had not taken any steps to repossess the house.

Bearing these facts in mind, I turn to a consideration of the issues before me. I start that process with a consideration of the first issue of, were the Bank's staff Code of Conduct incorporated and formed part of the contract between the parties?

Was the Staff Code of Conduct part of the Contract?

There is no dispute that the basis of the plaintiff's employment, prior to his dismissal, was his written contract of employment with the Bank. Where that is the case, the law is clear to the terms of the contract must we turn to for a determination of this issue. I summed up the legal position in the case of Igiseng Investments Limited v. Starwest Constructions Limited and Igiseng–Okmanip Business Group Inc (17/12/03) N2498 in these terms:

"It is settled law that generally where parties have reduced their agreement in case of an agreement into writing the document should be allowed to speak for itself. No extrinsic evidence can be allowed to add to, subtract from or contradict what is stated in the document. The same goes for any other written record. An authority on point is the Supreme Court judgment in Curtain Brothers (QLD) Pty Ltd & Kinhill Kramer Pty Ltd v. The Independent State of Papua New Guinea [1993] PNGLR 285. This case has been cited with approval in a large number of cases, which includes my own judgments in Odata Ltd v. Ambusa Copra Oil Mill Ltd (06/0701) N2106 and Papua New Guinea Forest Authority v. Concord Pacific Limited, Paiso Company Limited and The Independent State of Papua New Guinea (N0.2) (12/09/03)N2456.

However, this rule is general. Extrinsic evidence can be admitted to help resolve any ambiguity in a written document or record. Lord Davey in the Privy Council stated this principle in these terms:

'Extrinsic evidence is always admissible, not to contradict or vary the contract: but to apply it to the facts, which the parties had in their minds and were negotiating about: Bank of New Zealand v. Simpson [1900] UKLawRpAC 6; [1900] AC 182 at 187; Horsfall v.Braye [1908] HCA 85; (1908) 7 CLR 629'.

It is apparent that this rule concerns the admissibility of evidence and the purpose for which extrinsic evidence can be admitted when there is a written record. Hence, the issue of whether or not extrinsic evidence should be allowed has to be addressed before the evidence in question is admitted. Once the evidence is admitted, the issue no longer arises. Thus, the Court is entitled to consider the evidence before it and arrive at a decision whether or not to accept it."

Specifically, in the employment contract termination setting, I adopted and applied these principles in the cases of Tom B Gesa v. Bernard Kipit City Manager National Capital District Commission & NCDC (06/08/03) N2457; Mathew Petrus Himsa and Napao Namane v. Richard Sikani, Commissioner of Correctional Services & The State (08/11/02) N2307 and more recently, in the case of Wilson Thompson v. Bernard Kipit & NCDC (11/10/04) N2686. In the first case, there was an argument that the NCDC's staff disciplinary code was part of a written contract. The contract did not provide for that and I held that the Disciplinary Code was not part of the contract. The situation was similar in the second case, but this time the public services general orders. I arrived at a similar result in the last case, which concerned an alleged attachment to the Liquor Licensing Commission, where the instrument appointing the plaintiff as Chief Licensing Commissioner was silent.

In the present case, the contract does not make any provision for the application of the staff Code of Conduct to the plaintiff's contract. A variation to that could have seen an amendment to the contract to provide for that. The Supreme Court in PNGBC v. Jeff Tole (27/09/02) SC694, which concerned a contract of employment similar to the one in the present case noted that, the only valid way in which a change to a written contract could be brought about would be in accordance with the terms of the contract. The contract in that case expressly provided in Clause 34.1 for the "Managing Director to vary, amend, add or delete any part of the contract." There was no evidence of the managing director doing so in those terms. Furthermore, there was no foundation in the pleadings claiming any such variation. In those circumstances, the Court found that the Code of conduct was not a part of the contract between the parties.

As was the case in the cases cited, there is no pleading or any evidence of the parties in the present case varying the contract in accordance with clause 32 of the contract. This provision empowers the Bank to vary amend, add to or delete any part of the Contract either by mutual agreement or on three months written notice to the plaintiff. The plaintiffs evidence is lacking in this area. It follows therefore that the Code of Conduct was not incorporated into the contract.

Did the Bank Terminate the Contract Unlawfully?

I now turn to the next question of; did the Bank terminate the contract unlawfully? This question requires a close examination of the particular terms of the contract to determine it. The lawfulness or unlawfulness of a termination of an employment contract is usually dependent on the terms of the contract. Where the Contract is silent, the issue turns on the Employment Act in all cases except where other specific legislation applies. Therefore, it is necessary to closely, examine the terms of the contract for a lawful termination of a written contract of employment, as in the present case.

In the present case, Clause 3 of the contract makes it clear that the plaintiff's employment was for three (3) years from 27 October 1999, to 26 October 2002. That is however, subject to clauses 7 and 8. These Clauses provide that, either party may terminate the contract on notice. The plaintiff could terminate the contract on a three months notice. As for the Bank, it could terminate the contract at anytime for unsatisfactory performance and or for good cause. If it terminates on grounds other than that, the plaintiff would be entitled to and the Bank would pay the plaintiff his salary and entitlements for the unexpired duration of the contract or a maximum of up to three (3) months which ever is lesser.

Additionally, Clause 8(d) empowers the Bank to terminate the contract summarily in the following terms:

"The group may at its discretion summarily terminate this contract of employment for serious or willful misconduct, or if the officer commits an indictable criminal offence or becomes of unsound mind. If the Group summarily terminates this Contract the Group shall pay to the officer the salary and all other benefits pursuant to this agreement up to the date of termination. It is agreed that no further payments to be made or claimed in the event of the group summarily terminating this agreement. For the purpose of this clause, the group shall not be required to meet the costs of repatriation or to provide or going accommodation costs or motor vehicle provision in any form whatsoever.

Serious or willful misconduct includes but is not limited to:

(i) Theft of company funds or property.

(ii) Deliberate and willful disobedience of a reasonable and lawful instruction by an authorized officer of the group.

(iii) Violence or serious threatening acts against fellow employees.

(iv) Breach of fidelity.

(v) Excessive absenteeism, negligent of duty.

(vi) Intoxication in certain circumstances.

(vii) Criminal offences in certain circumstances."

The Plaintiff's termination was purportedly under this clause of the contract. It is the plaintiff's evidence and claim that, the Bank did not charge him with any offence and is not aware of the reason or justification for his termination. He goes on to say that, if his termination was for receiving the K100.00, then he says that was already dealt with, resulting in him being reprimanded with a final warning in accordance with the procedures stated in the Code of Conduct.

The plaintiff refers to and I accept that, the law is clear. Where there is a termination not in accordance with the agreement of parties, that has provisions for termination, it amounts to unlawful termination: Legu Vagi v. National Capital District Commission (03/08/02) N2280. In the case cited, I held that an employer would be in breach of a contract of employment having a provision to terminate without prior notice or payment in lieu of notice for any reason, if he terminates without notice or payment in lieu of notice.

In this case, there is both a provision for termination as well as provisions providing for breach of it. Clause 8 (d) of the contract gives the Bank the power to terminate the contract summarily for willful misconduct, if the officer commits an indictable criminal offence or becomes of unsound mind. The Banks evidence is that, it terminated the plaintiff because it eventually found out that the plaintiff was involved in a fraud against the bank, for which purpose he received K100.00. This was the subject of the investigations and interview of the plaintiff, which did not immediately reveal his involvement until after the investigations and decisions resulting in the warning letter's issuance. The plaintiff failed to rebut this part of the Bank's evidence. He merely said he thought the K100.00 he received was a Christmas bonus without showing how he was entitled to such a bonus. Accordingly, I find this was the reason for the Banks decision to instantly, dismiss the plaintiff.

In support of its position, the Bank relies on the well-accepted common law principle that an employer can hire and fire at any time with or without giving any warning or notice. Kirriwom J., correctly in my view, noted this principle in the following terms in Paddy Fagon v. Negiso Distributors Pty Ltd (10/06/99) N1900:

"In a master and servant relationship, the master has the right to hire and fire his servants. The same principle applies in private employment situations such as in this case as opposed to public sector employment or those employment concerned under the registered industrial organisations. Under common law a master does not have to give reasons for his decision to remove a servant and to replace one with another. That is his unfettered discretion and the common law respects. Common law is part of the under-lying law in Papua New Guinea which was adopted on Independence and over the years since the Courts in this jurisdiction have adopted and cherished this common law principle."

In Tom B Gesa v. Bernard Kipit & NCDC (supra) I made reference to this principle. The Supreme Court endorsed the application of this principle even in the context of employment in the public service and highlighted the fact that, the only right an employee has is a right to the appropriate period of notice and or payment in lieu of notice. That was in the case of Nazel Wally Zanepa v. Ellison Kaivovo, & The State (02/11/99) SC623 in the following terms:

"Whilst it may appear from Section 3(1)(b) of the Employment Act that public servants do not come under that Act because their employment comes under the Public Service (Management) Act, that Act does not then give them any more rights than under the Employment Act. What the Public Service Act gives is the right to air any grievance about their employment, to someone other than their immediate superior, but it does not take away the common law right to hire and fire, or the converse that the law does not force a reluctant employer to retain the services of an employee that it does not wish to continue relationships with. The Employment Act then comes in and gives an employee the minimum right to notice. We find that there is nothing in that Act which gives any rights or claims to permanency and thereby any consequent right to damages based on any other term than that referred to in the Employment Act."

Proceeding on that basis, the common law also allows an employer to rely on a ground not specifically specified and relied on for termination of an employment contract at the time of termination. Hence, as I noted in the case of Wilson Thompson v. Kipit & NCDC (supra), an employer can seek to justify his actions by advancing and relying on a ground, which might not have existed at the time of termination.

In this case, having regard to these principles, the failure to provide any reason for termination at the time of terminating the plaintiff by the Bank would appear to amount to a breach of clause 8(d). However, the reason later advanced and relied on, which the Bank can do, it appears to place the termination under clause 8(d). The act of accepting a commission for the purposes of a possible fraud against the Bank amounts to bribery. It is an act in serious breach of the plaintiff's fiduciary duty to the Bank as its then employer. Further, the alleged fraud could in effect amount to a theft of the Bank's funds. Given these, I am unable to find that the termination of the plaintiff was unlawful.

Assuming I was wrong in arriving at the foregoing conclusion (which I say am not), then the next relevant question is what are the plaintiff's remedies, if any? This is the subject of the third question so I turn to it now.

What are the Plaintiff's Damages?

At the time of the plaintiff's termination, he had nine (9) more months to go before the full term of his contract was up. He is therefore, claiming all of his entitlements for the balance of his contract. These amounts to about K46,233.56. He also claims a further K150,000.00 being for the value of a house he lost due to arrears in his loan, K20,000.00 for shock and distress, interests and costs.

Applying the principles discussed by the Supreme Court in Nazel Wally Zanepa v. Ellison Kaivovo & Ors (supra) and Ereman Ragi & The POSF Board v. Maingu (29/06/94) SC 459, I held in LeguVagi v. National Capital District Commission (supra) that the usual remedy for unlawful dismissal is damages. The measure of damages is usually the period of notice unless the contract otherwise provides.

The plaintiff referred the Court to the cases of Leo Nuia v. The State (29/08/00) N1986 and Peter Aigilo v. Sir Mekere Morauta & Ors (15/06/01) N2102, which I distinguished in Legu Vagi v National Court District Commission (supra). In those cases, the Court awarded damages beyond the period of notice because the relevant contracts, particularly the one in the second case provided for a payment of the balance of the contract in the event of any early termination by the employers. An additional consideration was the fact that the plaintiffs held important constitutional offices respectively of the Commander of the PNG Defence Force and the Commissioner of Police, the importance of which the defendant did not accord by adopting a mode of termination that showed no respect for the importance of the positions they had held.

Furthermore, the judgment in the Peter Aigilo case followed the judgment in Nahau Rooney v. Forest Industries Council [1990] PNGLR 407. In that case, the Court awarded damages beyond the period of notice because, the plaintiff had great difficulty finding a job at the same kind of level and salary package she was under in her employment with the defendant.

Subsequently, I reconsidered the correctness of the principles on which I assessed the damages in the Peter Aigilo case. This I did initially in the case of Teio Raka Ila v. Wilson Kamit & The Bank of Papua New Guinea (11/10/02) N2291. The Supreme Court judgment in Post PNG Ltd v. Yama Security Services Ltd (unreported and unnumbered judgment delivered on 26th July 2001) in SCA 80 of 2000, influenced me. There the Supreme Court said at pp. 4 - 5:

"Damages in contract are awarded to compensate a party for loss or injury not to penalise. Damages are awarded to put the injured party in the same position, as it would have been had the contract not been breached, and it is the duty of the Court to satisfy itself that a sum to be held over a party to enforce a contract. A Plaintiff claiming under a contractual provision for liquidated damages must show that the agreement represents a genuine pre estimate by the parties of the actual loss that will be occasioned if the contract terms are met. But if the provisions can be seen to be essentially a threat over a party to secure performance of the contract, the provision will be a penalty and unenforceable.

Courts have long held that because the purpose of a penalty is to ensured compliance rather than to truly compensate, agreements for sums found to be penal will not be enforced, and the party claiming damages will be properly and adequately compensated by an award of actual assessed loss. Further, if there be provision in an agreement for a sum or sums payable on breach wholly out of proportion to the breach. (sic) The Courts will hold such provision a penalty, as unconscionable, and unenforceable. "A Plaintiff cannot recover the sum stated in a contract if he has not in fact suffered such loss." (Law of Contracts, Cheshire & Fifoot 2nd Edn 767)."

The Court then went on to hold that, a Court dealing with a contract having such a provision has the duty to:

"...[I]nquire into the matter and determine whether the provision in the contract represents a genuine pre-estimate of the damages that will occur in the event of breach, as opposed to whether the sum designated is in reality a penalty to be imposed if the contract is not carried through."

In the Teio Raka Ila v. Wilson Kamit & The Bank of Papua New Guinea (supra) the plaintiff did not demonstrate and I could not find the relevant provision a genuine pre-estimate of the plaintiff's damages. Instead, I found it amounted to a penalty for not keeping the plaintiff employed. This highlights the fact that, having such a provision in a contract does not mean automatically that it is a penalty and as such, unenforceable. Rather, it entails an obligation on the party seeking its enforcement to demonstrate that the provision in question is a genuine pre-estimate of his damages.

In the present case, the relevant clause is clear. It provides effectively that if the Bank terminates the contract on grounds other than poor performance or good cause, the plaintiff would be entitled to and the Bank would pay him his salary and entitlements under the agreement for the unexpired duration of the contract or a maximum of up to three (3) months, which ever is lesser. This means, the plaintiff is entitled to up to a maximum of three months pay and entitlements where the unexpired term is beyond three months. Where it is below that period, he is entitled to pay up to the unexpired period.

PNGBC v. Jeff Tole (supra) had a contract similar to the present. The employer there was the then Papua New Guinea Banking Corporation. The appellant dismissed the respondent one year and 8 months before the expiry of the contract. There, the contract provided for a payment of salary and other entitlements of the unexpired term but up to a period of 12 months, whichever was lesser. On termination, the appellant paid the respondent 12 months pay and other entitlements. Not being content with that, the respondent sued for the full balance of the contract. The National Court upheld that claim. However, on appeal, the Supreme Court disallowed the award of damages beyond 12 months equivalent. In so doing the Supreme Court said (per Kandakasi J. with Sheehan J. agreeing) that:

"... [T]he parties specifically agreed in terms of clause 28 of the contract as to the consequence that should follow if PNGBC terminates Mr. Tole's contract with it prematurely for reasons other than satisfactory performance and or cause. It was agreed that Mr. Tole should receive 12 months entitlements or the balance of the contract period, which ever of the two is the lesser. His termination was in accordance with the agreement. In his argument, Mr. Tole argues that, PNGBC terminated his contract with it outside the contract so as to come within the reasoning in the Peter Agilo Case. There is however, no demonstration of how PNGBC acted outside the contract other than to terminate him before the end of his contract without reason and notice and how Mr. Tole's then employment setting with PNGBC was important in terms of the PNG Constitution.

As I said in the Peter Agilo Case, the Court's duty in a case of breach of contract is to interpret the terms of a contract in a way that will give effect to the intention of the parties. It is not the duty of the Court to adopt an approach that has the effect of re-writing the contract in the disguise of interpreting it. The only exception there is, where the wording of the contract does not support a meaning that is argued for.

In this case, the parties agreed in clause 28 of their contract that, PNGBC could terminate the contract either for "unsatisfactory performance" or "for reasons other than" that before the expiry of the contract. If PNGBC chooses to terminate the contract for a serious disciplinary matter then, the disciplinary procedure under clause 29 should be first adhered to. If however, it chooses to terminate for any other reason then, it could do so but must pay Mr. Tole the balance of his contract or 12 months entitlements which ever is the lesser of the two.

The termination was not for a serious disciplinary matter, therefore, he was terminated "for reasons other than" that. As at the time of his termination there remained a period of 1 year 8 months of the three-year contract. PNGBC paid Mr. Tole his entitlements for 12 months in accordance with clause 28 (c) of the contract. Nothing further was therefore due to him. In my view therefore, the learned trial judge fell into error when he decided to make an award for the whole of the balance of the contract period less the 12 months already paid."

In the case before me, the plaintiff has not demonstrated how, this Court should depart from the approach of the Supreme Court in the above case for the principles it discussed and applied. What is clear is that if the Bank dismissed the plaintiff prematurely for reasons other than poor performance or for good cause, he was entitled under the contract to receive three months pay or the remaining balance of the contract if it was lesser than three months. The evidence shows that the plaintiff was paid his entitlements upon termination. The plaintiff does not demonstrate how that was not sufficient or excused the Bank from further claims. It follows therefore that he is not entitled to any further damages in terms of lost contract entitlements for the unexpired component of the contract.

Notwithstanding the foregoing, the plaintiff refers to the case of Lucy v. Commonwealth [1923] HCA 32; [1923] 33 CL R 229, per Knox CJ., at 238, 239 and Start J. at 253, as well Commonwealth v. Amann Aviation Pty Ltd [1991] HCA 54; [1991] 66 A L JR 123, per Brennan J., at 137, 138 and claims he is entitled to claim consequential loss. Under this, he is claiming the value of the house he bought under the home ownership scheme. His argument is that he entered into the loan agreement based on his employment and continued employment with the defendant for 15 years until retirement. By that time, he would have purchased the house.

If that is correct, there should be provision made in the contract of employment or the loan agreement to reflect that. The plaintiff does not point to any particular provision of the contract of employment or the loan agreement that accommodates this aspect of his claim. What is very clear however is the fact that the contract of employment was for a period of three years as opposed to a continuous employment for 15 years. In the absence of any evidence to the contrary, I would take it that the loan agreement was similar to any other loan agreement, which places an obligation on a borrower to be in continuous employment or have a secured source of income to repay the loan. I am not aware of a case, in which an employer is obliged to continue to employ an employee merely because the employee has an outstanding loan with the employer. The plaintiff's claim effectively says that, because of the loan agreement, the Bank as an employer was not entitled to terminate him even if the Bank had cause to terminate him. This sounds well in terms of a penalty rather than a good enforceable legal agreement. The burden was on the plaintiff to make out his claim as one recognizable at law and enforceable. On the material before me, he has failed to discharge that burden. I am therefore, not persuaded to grant this claim.

The plaintiff also claims damages for distress and frustration. In support of this part of his claim, he refers to and relies on the case of Harding v. Teperoi Timbers [1988] PNGLR 128 and Naguwean v. The State [1992] PNGLR 367. In those cases, the National Court awarded K1,000.00 each in damages for distress and frustration caused to the plaintiff by reason of their respective defendant's premature termination of the employment of the respective plaintiffs. Reliance is also place on my judgment in Peter Aigilo case, where I made an award of K20,000.00 for distress and frustration.

The first of the above three cases, has been cited by many cases as authority for the awarding of damages for distress and frustration following on from the authority of Hodson v The State [1985] PNGLR 303. The relevant passage from that judgment is in the following terms at page 136, per Kidu CJ:

"I consider that in employment contracts, there cannot be any doubt that it is the contemplation of the parties that if the employee is dismissed in breach of the contract, it is possible that the effects would be to cause him/her to suffer some degree of mental distress, frustration or upset. This is only a good common sense conclusion."

In the Harding v. Teperoi Timbers (supra) and Naguwean v. The State (supra) cases, there were meager evidence of the plaintiff suffering distress and frustration following their dismissal. Yet the Court awarded damages. In the Peter Aigilo case, there were medical evidence supporting the plaintiff's claim of suffering from mental distress and frustration caused by shock and stress brought upon the plaintiff by his sudden termination without following the procedures laid down in the Constitution for the dismissal of Police Commissioners. I observed and assessed the appearance of plaintiff as one seriously affected medically, which the medical evidence adduced by the plaintiff supported. On similar evidence, Kapi DCJ (as he then was) awarded damages of K15,000.00 for distress and frustration in Peter Na-Al v. Michael Debege and Fly River Provincial Government (12/05/00) N1958. Likewise, Sevua J award K5,000.00 in Leo Nuia v The State (supra), where there was evidence of dismissal in most unusual circumstance including wide media publication over his termination.

On the other hand, there are a number of cases as in Paddy Fagon v. Negiso Distributors Pty Ltd (supra) N1900 and Porgera Development Authority and M Ramiah (General Manager) v. Ricton Pindapae (12/04/00) N1945, where the Court has refused to ward damages for distress and frustration on account of unlawful termination. What Kirriwom J. observed in the first of these two cases, provides good reason in my view for these lines of authorities. There His Honour said:

"Each case must be decided on its own merits. Here is a case where the Plaintiff apparently has done nothing wrong in so far as his employment is concerned. The only wrong he may have done is that he over-stepped his powers and question the authority of his immediate supervisor, the General Manager. But he is not told that this is the reason for his termination. It is only assumed that this may be the reason. I have no doubt that he suffered distress, frustration and disappointment by the lack of reasons for his termination, which under a judicial review process he would have been accorded some re-dress.

The plaintiff's predicament is the result of his own deliberate making and there is nothing so exceptional about it. He was no doubt distressed, frustrated and disappointed by the termination but he was able to overcome all these sufferings when he returned to his old job at PNG Motors. There is no real injustice where there is no permanent injury occasioned by operation of the law. This is the distinction that needs to be drawn between 'interest of justice' cases and commercially orientated suits."

Then as Hinchliffe J. observed in the second of the above two cases, "obviously every employee should be under no misunderstanding that termination is an expected eventuality. It is only a question of when that would occur. It follows therefore that, there should be no surprises when dismissal does take effect. After all, termination of ones employment does not bring joy and comfort to an employee unless an employee wishes for it. Instead, they result in disappointments, frustrations and hurt. The question than is, should every disappointed, frustrated and hurt employee be compensated? If so, then what becomes of the right of an employer to hire and fire at will".

I am of the view that, the law should only compensate those caused to suffer by the very mode of termination adopted by an employer that is clearly unlawful and does result in some proven damage or negative mental and physical impact on the dismissed employee, supported by appropriate medical or such other evidence. I do not consider it is right for there to be awards of damages for distress and frustration just because a dismissed employee claims it. For there is the danger that, by so doing, the Court might circumvent the long established principles of law that recognizes the right of an employer to hire and fire at will except as may be modified by statute or the free agreement of the parties. Not only that, it will also re-write, without good cause, the law requiring proof of one's loss before any damages or an award could be made by a Court of law.

In the present case, the plaintiff claims he suffered distress, frustration and humiliation because of the premature termination of his employment. He makes specific reference to the effect of his termination on the Christmas eve, without reason. That disrupted his Christmas plans and affected his subsequent job applications, which resulted in further humiliation, frustration and distress worsened with negative results in subsequent job applications.

This aspect of the plaintiff's claim is without any medical or such other credible evidence supporting the claim that he suffered distress and frustration. Just what did this mean on his mental and generally his health, is not clear. Without any evidence forming the foundation for this, there can be no basis for the claims. Further, the contract clearly provided for instant dismissal without reason and without prior notice or warning for poor performance and good cause. Accepting a favour, gift or a bribe to facilitate a fraud against his employer disclosed by the evidence in this case is good cause. It is a well-recognized ground at common law for instant dismissal. The contract did not displace that right. In the circumstances, I am not satisfied that the plaintiff has established suffering, compensable, distress and frustration following his dismissal. I am therefore, disinclined to making any award for damages for distress and frustration.

Summary

In summary, I find and hold that the Bank lawfully dismissed the plaintiff following discovery of him facilitating a fraud against it. Further or in the alternative, if the dismissal was unlawful, the plaintiff did not establish, what if any damages he suffered, both by pleading his damages with particulars and later by evidence. As such, no damages could be awarded for all or any aspects of the damages claimed. Consequentially, I order a dismissal of the plaintiff's claim with costs following that event.

Lawyers for the plaintiff: Harricknen Lawyers.
Lawyers for the defendant: Allens Arthur Robinson.