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Bure v Kapo [2005] PGNC 36; N2902 (31 May 2005)

N2902

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

CIA 287 OF 2003

Between:

AYLEEN BURE
-First Appellant-

And:

MARK FISHER
-Second Appellant-

And:

GARY O’BREE
-Third Appellant-

And:

EVERT VAN DAN BRAND
-Fourth Appellant-

And:

PLACER (PNG) LIMITED
-Fifth Appellant-

And:

ROBERT KAPO
-Respondent-

Waigani : Injia, DCJ
2005 : April 21st, May 31st

Master and Servant – Written Employment Contract – Private employment contract – Terms – Adoption of company policy setting out disciplinary procedure for termination of employment – Employee given right to be heard before decision on termination made – Procedure designed to ensure fairness in process of termination for cause –Procedure not followed – Breach of Contract – Remedies – Re-instatement not available – Damages appropriate remedy.

Cases cited in the judgment:
Okuk v Falsheer [1980] PNGLR 101.
Neggints v Tokam [1993] PNGLR 66

J. Parina for the Appellant
A. Wagambie for the Respondent

31st May 2005

INJIA, DCJ: This is an appeal from the decision of the District Court held at Port Moresby on 17 November 2003. The Court found the Appellant had wrongfully terminated the Respondent’s employment in breach of a written contract of employment and ordered his re-instatement with full entitlements back-dated to the time of his dismissal.

There are five grounds of appeal and these are:

"1. Learned Magistrate erred in fact and law in finding the Complainant’s termination was wrongful when the Complainant’s employment was lawfully terminated in accordance with the terms of the contract of employment and the Employment Act Chapter No. 373.

2. The learned Magistrate erred in fact and law in failing to find that the Complainant had failed to prove his claim that he had a right to be heard by the Fifth Defendant before the Fifth Defendant deciding on his termination.
   
3. The learned Magistrate erred in law in ordering that the Complainant be reinstated in the employ of the Fifth Defendant when at law reinstatement cannot be ordered in an employer-employee relationship.
   
4. The learned Magistrate erred in law in ordering that the complainant’s entitlements be back-dated to the date of termination as such relief cannot be granted at law in claims for wrongful dismissal.
   
5. The learned Magistrate erred in fact and law in failing to find that the Complainant was lawfully terminated in accordance with the terms of the contract of employment and the Employment Act Chapter No. 373."
   

In the Court below, both parties filed affidavit evidence and gave oral evidence, on the circumstances of the incident at the Jacksons Airport which resulted in the Respondent’s dismissal. The uncontested facts were that the Respondent was employed by Pogera Joint Venture (PJV) at its Mine Site at Pogera. PJV is owned by the Fifth Appellant. In 1995, PJV and the Respondent entered into a written Contract of Employment ("the Contract").

On 22 July 2002 the Respondent had just completed his field break in Port Moresby and he was on his way to board a chartered Hevilift helicopter flight bound for the Pogera Mine site when he was stopped by Hevilift’s employees and Airport Security Officers because they claimed that he was intoxicated. On the same day Hevilift officers faxed a report on the incident to PJV. The report stated that the Respondent was refused boarding "due to intoxicated at the time of check-in". The Respondent contacted PJV and asked if he could be allowed to return to Pogera to give his side of the story before PJV made a decision. PJV refused. On the next day, he was dismissed on the grounds that "member intoxicated and not permitted to return to site on charter from Pom." The dismissal notice was signed by the Third Appellant who was the Operations Security Co-Ordinator.

In the Court below, there was a contest as to whether he was drunk or intoxicated and whether his actions constituted an offence under PJV’s Manual of Personnel Policy and Procedures ("the Manual"). Both parties were represented by lawyers and relevant issues of fact and law were argued. The Magistrate gave a short ruling and later prepared a written judgment setting out his full reasons for decision.

All the grounds of appeal relate to provisions of the Contract. Ground 1, 3, 4 and 5 relate to Clause 14 of the Contract and the Employment Act (Ch. No. 373). Ground 2 relates to Clause 14 of the contract and Sections 5.6 - 5.8 of the Manual, a copy of which was annexed to the Third Appellant’s affidavit and produced in evidence before the Court. This ground raises an important issue of law and I wish to deal with it first.

The terms and conditions of the Contract offered by PJV to the Respondent are set out in a letter written to the Respondent. Clause 14 provided:

"14. This Contract of employment may be terminated by the giving of four weeks notice by either party, or by the Company without notice on payment of four weeks salary. In the event of a severe breach of company policies, employment may be terminated without notice and without payment of four weeks salary."

The Respondent endorsed his acceptance of the terms and conditions offered, in the following terms:

"I accept the terms and conditions outlined in the above Contract of Employment, and agree to abide by the Companies Policies and Procedures."

Clauses 5.6 - 5.8 of the Manual states:

"5.6 DISCIPLINARY GUIDELINES

5.6.1 ....
5.6.2 ....
5.6.3 Example of Offences Which May lead To Dismissal

.....

- Report to work under the influence of liquor or drugs.
- Behaving in a manner whilst in transit on field break or away on Company business which causes inconvenience to or disturbs other employees or the public and/or brings the Company’s name into disrepute..."

5.7 DISMISSAL AND TERMINATION

5.7.1 Where the offence is considered serious enough to warrant possible dismissal and/or the employee’s presence could lead to injury, loss, damage or disturbance, the employee must immediately be stood down without pay, to enable a complete investigation to be conducted. The employee will be given an opportunity to put their case forward. The employee is to be informed as to when to report to the Human Resources Administrator or his/her designate accompanied by the supervisor to be counselled and advised of what action is to be taken. Should the investigation favour the employee, the suspension shall be withdrawn and the employee shall be withdrawn and the employee shall be paid at the rate of a 40 hour week for the time of the suspension.

5.7.2 Except in extreme circumstances, the employee under suspension, if occupying Company accommodation, shall be able to remain in that accommodation during the period of investigation.

5.7.3 During the investigation the Company may consider any evidence or circumstances relating to the alleged offence which it considers necessary, desirable and/or relevant.

5.7.4 Employees can only be dismissed immediately with the written authority of the Mine General Manager or his/her Designate. In all cases the Administration & Finance Superintendent or his/her Designate will be advised in advance of any request to dismiss an employee.

5.7.5 An employee has the right to present evidence and/or call witnesses in his/her defense and the immediate supervisor shall make the necessary arrangements. A member of the Company Relations Department will be available to provide advice to both the employee and the immediate supervisor.

5.7.6 As soon as practicable, written statements must be obtained from the employee and all witnesses, and from the supervisory staff involved.

5.7.7 Should an employee be absent from their place of employment for a period of five consecutive working days without notification then the supervisor can deem the employee has abandoned their employment and their services can be terminated.

5.8 APPEALS PROCEDURE

• 5.8.1 Disciplinary action appeals
  1. Employees sign a written warning as having been informed in person of its contents and having read it, not that they accept the findings on the form.
     
  2. Where the employee feels he/she has been the subject of unfair disciplinary action, then an appeal in writing may be lodged with their supervisor. This right must be clearly explained to an employee at the time of disciplinary action.
     
  100. If the employee cannot resolve the dispute with their supervisor, they can present their grievance to the next level of supervisor which will be the General Foreman or his/her equivalent. If disputes cannot be resolved at this level then the matter should be referred to the Department Head at the time of the alleged incident before being referred to the Human Resources Administrator.
       
  4. If the employee is still not satisfied, the appeal shall be heard by a panel consisting of a member of Senior Management, a representative from the Company Relations Department and the employee’s departmental head at the time of the alleged incident shall hear the appeal. The disciplinary action may be amended, revoked or confirmed by the Mine General Manager.
     
  5. The employee has the right to be accompanied by a colleague who may support the employee at this stage of the procedure.
     
  6. Appeal hearings must be documented and a summary of proceedings signed by the employee and the Department Head to indicate that it is a true record of the hearing.
     
  7. The above procedures in no way affect an individual’s right to seek redress from avenues available through the Department of Employment and Youth.
     

Mr Parina submits the Respondent failed to provide any evidence to prove that a right to be heard existed. Therefore, the Court erred in law and fact in finding that such right existed. The principles in the case of Neggints v Tokam [1993] PNGLR 66 quoted by the Court on the principles of natural justice applies to public contract of employment and has no application to private contracts of employment. He submits the second sentence in Clause 14 of the Contract gave PJV the right to terminate the Contract without notice and without 4 weeks salary in the case of severe breach of company policy. No such right to be heard is given by Clause 14. In this case the Respondent committed severe breach of Clause 5.6.3 of the Manual. There was sufficient information supplied by Hevilift Officers and CIA Security Officers to PJV on the incident, which formed the basis of the decision. Also, there was sufficient evidence before the Court to warrant a finding that the Respondent was intoxicated at the airport terminal and was rightly refused boarding.

Mr Wagambie submits the right to be heard is given by the Manual which is expressly adopted by the Contract. He was entitled to be heard before his termination as provided in Clause 5.7. There was also a breach of the common law principles of natural justice as adopted and applied in S.59 of the Constitution, and adopted in various cases including Okuk v Falsheer [1980] PNGLR 101.

I accept that the relationship between PJV and the Respondent is purely one of private contract and it is strictly governed by the terms of the written Contract. The cases cited to me by Mr Parina clearly show that in a private contract of employment, the employer has the right to hire and fire, with or without notice, upon payment of money in lieu of notice as prescribed by the Contract. This position is reflected in the first sentence of Clause 14. If the Contract was to be silent on notice, relevant provisions of the Employment Act is implied.

Written Contracts of employment in private contracts ordinarily do not provide for a disciplinary process which governs dismissal on disciplinary grounds, such as those prescribed by statutes governing public employment found in public employment contracts. It is indeed rare to see extensive stringent disciplinary procedure which are expressly stated by private companies in written contracts or adopted or implied from external sources. However in the case of PJV, for some reason to do with public policy on employment of officers, PJV decided to include those disciplinary provisions in the Manual. The second sentence in Clause 14 of the Contract expressly refers to the "Company Policies". The Respondent’s endorsement also expressly refers to the "Company’s Policies and Procedures". I take them to mean reference to the Company’s Manual of Personnel Policies and Procedures. The Manual defines disciplinary offences and prescribe the disciplinary procedures to be followed. They require the employer to carry out full and proper investigations into the alleged offence and give the employee an opportunity to be heard before a decision on dismissal is made. It is inaccurate to describe this procedure as incorporating traditional principles of common law on natural justice, as adopted under S.59 of the Constitution and applied in many cases dealing with public employment contracts. But it is accurate to say the disciplinary process in Clause 5.6 – 5.8 are designed to ensure fairness in the process of dealing with disciplinary offences. In my view, they do confer a right on the employee to be heard on the charge before a decision is made by PJV. This right is conferred by the written Contract and not by the common law. The question is whether the Contract adopted the disciplinary procedure in the Manual.

The disciplinary procedure found in the Manual in the present case, are matters purely for the parties to adopt by agreement in their written contracts. They are policies and procedures which the company has developed to ensure there is fair play in the process of removal of an officer for breach of Company Policy which creates disciplinary offences. There is clear reference to the Manual in Clause 14 of the Contract and the terms of the acceptance by the Respondent. I am satisfied that the Manual formed part of the terms and conditions of the written Contract and any termination for breach of discipline would have to be done following the procedures outlined in Clause 5.6 - 5.8.

The right to be heard was conferred by contractual agreement. By relying on reports received from Port Moresby airport security officials and Hevilift officials and by declining the Respondent’s request to return to the Mine Site to give his explanation and terminating his employment, the Respondents failed to comply with the prescribed procedure for conducting a proper and full investigations into the incident and dismissing him without giving him an opportunity to be heard, before the decision was made. The Magistrate was correct therefore in coming to the same conclusion.

But then there is a conflict between the disciplinary process in the Manual and the second sentence of Clause 14 of the Contract. The second sentence in Clause 14 of the Contract has in effect rendered the disciplinary process for serious breaches of discipline in Clause 5.7 ineffective. Is this permitted to be done? It seems to me there is a conflict between the disciplinary procedure and Clause 14 insofar as the "right to be heard" is concerned. On the one hand, the company has reserved the right to summarily dismiss him for a disciplinary offence created by the Manual. In other words, without giving the Respondent the right to be notified of the reason for his dismissal and without giving him an opportunity to be heard and without giving him his termination entitlements. On the other hand, the Respondent has agreed to comply with the Manual and to be dealt with under the procedures set out therein. There is an ambiguity or confusion here. The Magistrate did not address this anomaly. It is open for this Court, by way of re-hearing, to address it.

There is another provision in the policy which appears to give PJV the right to summarily dismiss an employee on disciplinary grounds, without giving notice. That is Clause 5.7.4 of the Manual. An employee can immediately be dismissed for disciplinary reasons by the Mine General Manger or his designate. The question is whether he may do so without complying with the rest of the disciplinary procedures in Clause 5.7. If so, then the second sentence in Clause 14 would be consistent. But then how could PJV avoid the rest of the disciplinary procedure in Clause 5.7 and even the appeal process in Clause 5.8? There is an ambiguity or confusion here.

Clause 1.3 of the Manual makes provision for resolving any ambiguity in the application and use of the Manual in individual cases, as follows:

"USE OF POLICY MANUAL

This manual is for the use and guidance of supervisors and managers at all levels, in their inter-relationships with their employees. Where a doubt or apparent ambiguity exists in the application of Company Personnel Policy, or should a matter arise that does not appear to have been covered specifically in this manual, the Human Resources section should be consulted before proceeding to act. If necessary, such policy will be reviewed to remove further doubt and ambiguity."

This provision is clear and requires no interpretation.

In the present case, there was no evidence placed by the Appellants before the Court below, to show the two ambiguities referred to were resolved before the Respondent was dismissed without following the disciplinary process prescribed by Clause 5.6 – 5.8 of the Manual.

Also the evidence was that the Third Appellant dismissed the Respondent. He is not the Site General manager to "immediately" dismiss the employee. There was no clear evidence of any authority, written or otherwise, from the General Manager authorizing him to dismiss the Respondent. The Third Respondent said he obtained verbal authority from the Site General manager to effect the termination. But the notice of termination did not refer to any such delegated authority. There was also no evidence from the Site General Manager showing he gave such authority. Therefore, this explanation lacked weight. Then there is no evidence that he consulted the HR Section to resolve the ambiguity. He effected immediate dismissal.

In my view, to the extent that the second sentence in Clause 14 of the Contract offended company policy Clause 5.7.1, etc, it should be struck down. It was clearly intended by parties to the Contract that in the case of removal on disciplinary grounds, the disciplinary process set out in Clause 5.6 – 5.9 would be applied.

I find, as did the Court below, that under the disciplinary procedure, the Respondent had a right to be heard, which was denied. Therefore, the dismissal was wrongful.

Insofar as the establishment of the grounds for termination in grounds 1, 3, 4 and 5 of the appeal are concerned, the arguments before me were a repeat of the arguments raised in the Court below, one of the main issues being whether there was evidence or sufficient evidence to show that the respondent was intoxicated and an offence was established. Having decided that the dismissal process was flawed and in breach of the Manual, it is unnecessary for me to decide this issue.

Insofar as grounds No. 1, 3, 4 and 5 are concerned with the question of the appropriate relief, the question is whether the Respondent should be re-instated with back-dated entitlements or paid four weeks salary in lieu of notice. The notice provision in Clause 14 of the Contract and under the Employment Act applies to termination other than for disciplinary offences e.g. due to redundancy in position, resignation, retirement on medical grounds, etc. As for termination on disciplinary grounds, they would have no application. On the principle of res integrum, he is entitled to be paid his back-dated entitlements up to date of judgment.

As to the question of whether he should be re-instated, I accept Mr. Parina’s submission that the Court should be loathe to order re-instatement where the relationship between the employer and employee has broken down. It is clear to me that although the Respondent was employed for some 9 years, PJV, for reasons known to it, had no hesitation in terminating his employment. PJV then defended its action vigorously in the Court below and before this Court. This shows that PJV had lost faith or interest in this employee. As a matter of public policy, the Court will not order an unwilling private employer who has lost faith in the employee, to re-engage him or her. There is sufficient authority in the common law and in this jurisdiction on this principle. Many of these cases have been cited by both counsel.

For these reasons, I find that the Court erred in ordering his re-instatement. I quash that part of the order.

In my view, the Respondent is entitled to reasonable damages which includes backdated entitlements. Damages should be properly assessed by the Court below. If the amount claimed is expected to exceed the monetary jurisdictional limit of the Court below, which I understand is K10,000.00, the Magistrate may refer the matter to the National Court under ss.23 and 24 of the District Courts Act.

In relation to costs of this appeal, as the Appellant has been partly successful in this appeal, I will order both parties to meet their own costs.

The Orders of this Court are as follows:

1. The Appeal is allowed in part only.
   
2. The decision of the District Court at Port Moresby made on 17 November 2003, that the Appellant be liable in damages to the Respondent for breach of Contract of Employment, is confirmed.
   
3. The decision of the said District Court in ordering re-instatement of the Respondent to his former job, is quashed.
   
4. The question of damages is referred back to the District Court for proper assessment with a proviso that, should the damages claimed exceed the jurisdictional monetary limit of K10,000.00, the Court should consider referring the case to the National Court for assessment of damages, pursuant to ss.23 and 24 of the District Court Act.
   
5. Each party bear their own costs of the appeal.

______________________________________________________

Lawyer for the Appellant : Blake, Dawson Waldron
Lawyer for the Respondent : Jerewai Lawyers