|
|
Home
| Databases
| WorldLII
| Search
| Feedback
National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
CIA NO 46 0F 2006
VERE KILAO
First Appellant
CHEMICA DIDIMAN STORE, KIMBE
Second Appellant
V
BERNARD TIAU
Respondent
Kimbe: Cannings J
2006: 2 August,
2007: 16 February
LAW OF EMPLOYMENT – oral contract of service – termination of contract for cause – wrongful dismissal claim – alleged breach of contract by employer.
APPEAL – whether District Court made decision against weight of evidence – District Courts Act, Section 230 (power of National Court upon appeal) – power to vary order appealed from and make order which ought to have been made by the District Court – whether power to vary District Court order is contingent on appeal being allowed.
The respondent was employed by a didiman store in Kimbe. He let three bags of chicken stock feed go out of the store to someone who had not paid for them. The customer who actually paid for them became irate and complained to the respondent's boss who sacked the respondent. The respondent sued his boss (the first appellant) and the store (the second appellant) in the District Court for wrongful dismissal. The District Court found in the respondent's favour and awarded him damages of K1,000.00. The appellants appealed on the grounds that (a) the dismissal was justified under Section 36 (grounds for termination of contract) of the Employment Act and (b) the award of damages was excessive.
Held:
(1) When an employer terminates the employment of an employee for cause under Section 36 of the Employment Act, the terminated employee may establish a cause of action in breach of contract if the reasons for termination are proven, in fact, not to have existed.
(2) Even if there is on the face of it good cause to terminate employment the employee must first be given a right to be heard before a considered decision is made whether to terminate employment.
(3) The District Court carefully considered the evidence as to the circumstances in which the plaintiff was terminated and concluded that termination for cause under Section 36 of the Employment Act was not justified; and a review of the evidence by the National Court showed that that was a finding reasonably available on the evidence. The District Court's decision was not against the weight of the evidence.
(4) On the evidence before the District Court a decision ought to have been made that the contract of employment was also breached by the employer's failure to administer a right to be heard prior to terminating the plaintiff's employment.
(5) In assessing damages for wrongful dismissal a court is not restricted to the amount of wages that would have been earned in the notice period.
(6) The amount of damages awarded by the District Court of K1,000.00 was not excessive. On the contrary it was a modest amount and inadequate in all the circumstances. The National Court has the power under Section 230 of the District Courts Act, on an appeal, to vary orders made by the District Court and that power is not subject to the appeal being upheld or a cross-appeal being instituted.
(7) The District Court's order was quashed and substituted with an award of damages of K2,000.00. The appeal was substantively dismissed.
Cases cited
The following cases are cited in the judgment:
Egga Pua v Otto Benal Magiten (2005) N2892
Jimmy Malai v PNG Teachers Association [1992] PNGLR 568
Joe Kala v NBPOL OS, WS No 879 of 2005, 16.02.07, unreported
Vitus Sukuramu v NBPOL and Others WS No 1175 of 2003, 16.02.07, unreported
APPEAL
This was an appeal from a decision of the District Court upholding a claim for wrongful dismissal.
Counsel
L Tunian, for the appellants
O Oiveka, for the respondent
16 February, 2007
1. CANNINGS J: This is an appeal against a decision of the District Court at Kimbe, constituted by Mrs G R Coppard, in which her Worship upheld a claim for damages for wrongful dismissal. In July 2005 the respondent, Bernard Tiau, commenced work as a supervisor of counter-sales with the Chemica Didiman store in Kimbe. There was no written contract. It was an oral contract of service. In December 2005 he let three bags of chicken stock feed go out of the store to someone who had not paid for them. The customer who actually paid for them became irate and complained to the respondent's boss, the store manager, who sacked the respondent. The respondent sued his boss (the first appellant) and the store (the second appellant) in the District Court for wrongful dismissal. The District Court found in the respondent's favour and awarded him damages of K1,000.00.
DISTRICT COURT PROCEEDINGS
2. On 31 January 2006 the respondent filed a complaint in the District Court. There were two defendants: Vere Kilao (the store manager) and Chemica Didiman Store Kimbe. The complaint was that the appellants wrongfully terminated the respondent's employment as they made false allegations of embezzlement against him and denied him natural justice. The respondent claimed damages for wrongful termination and for loss of reputation. The complaint was tried before the District Court on 10 March 2006. The respondent represented himself and the appellants were represented by Ms Tunian, of Warner Shand Lawyers. Three witnesses gave sworn oral evidence and were subject to cross-examination.
3. The respondent, Bernard Tiao, said that a customer, Ben Hambu, purchased 14 bags of chicken stock feed but could not take them all with him. So Mr Hambu made an arrangement that the bags would remain in the store and he would come and collect them one by one when he came to town. The arrangement worked fine for the first five bags. When he came to collect the fifth bag Mr Hambu was accompanied by another person. Shortly after they left, the same person who had accompanied Mr Hambu came back, with somebody else, and asked for three more bags. The respondent quizzed them whether that was true as Mr Hambu had only just been in to collect a bag. They responded that it was true and that they had a vehicle available so they must get three more bags. As it turned out they were not telling the truth. A week later Mr Hambu came in to collect another bag and became angry when the respondent told him there were only six bags left. Mr Hambu said it should be nine bags. Mr Hambu complained to the store manager (the first appellant) who told the respondent he would have to pay Mr Hambu K213.00. The respondent did not have that amount of money but got a loan and paid Mr Hambu. The first appellant then sacked the respondent without notice. There was nothing put in writing. He just said 'you're finished'. The respondent was paid finish pay of K112.80.
4. The first appellant, Vere Kilao, said the problem arose because when the respondent sold the 14 bags of stock feed he kept the receipts to himself when he should have put them in the office. The customer, Mr Hambu, complained. Then other customers became angry and accused the store of stealing their money. The first appellant denied sacking the respondent in the open or calling him a thief.
5. The customer, Ben Hambu, said the total cost of 14 bags was K1,024.00. He confirmed that on the day he got the fifth bag he did not send anyone back to get another three bags.
6. Her Worship Mrs Coppard handed down judgment on 24 March 2006. She rejected the appellants' argument that the respondent's termination was justified under Section 36(1)(a)(ii) of the Employment Act. It was an unjustified dismissal, as the real culprit was the customer's friend who came back and stole the three bags. The respondent was loyal, faithful and innocent. He was treated unfairly and firing him was unjust and unlawful. Her Worship concluded:
For the employer to lean on the common law as stated for termination of employees would be to deprive the workman of all forms of compensation.
The plaintiff suffered from distress, frustration and genuine disappointment as he was penalised twice for a wrong the defendants [ie the appellants] did.
The plaintiff [ie the respondent] must be compensated so that justice is seen to be done.
7. Her Worship awarded the respondent damages of K1,000.00 plus K114.00 costs.
APPEAL TO NATIONAL COURT
8. Five grounds are set out in the notice of appeal but they overlap and can be summarised as:
EMPLOYMENT ACT
9. The provision of the Employment Act at the centre of the District Court proceedings, and the provision again relied on by the appellants in this appeal, is Section 36(1). It states:
(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.
APPELLANTS' SUBMISSIONS
10. Ms Tunian argued that this was a case of lawful termination of employment under Section 36(1)(a)(ii) of the Employment Act. The respondent had misconducted himself by an act of commission inconsistent with the due and faithful discharge of his duties. The respondent was the cause of his own downfall. He was the one who let the three bags of stock feed go out of the store without authority. The arrangement with the customer was that the customer would come and collect the bags one by one when he needed them. The customer did not authorise anyone else to collect bags on his behalf. The respondent should have thoroughly questioned the person who came in to collect the bags before believing what he told him. It was the respondent's failure to discharge his duties diligently that led to the bags being stolen. Instant dismissal, without notice and without payment instead of notice, was warranted. Her Worship Mrs Coppard erred in law by finding, against the weight of the evidence, that the respondent was innocent of wrongdoing. Furthermore under the common law an employer is allowed to fire an employee for any reason, provided any requirements for notice or money in lieu of notice are satisfied. This principle has been adopted as part of the underlying law of Papua New Guinea as shown by the Supreme Court's decision in Jimmy Malai v PNG Teachers Association [1992] PNGLR 568. Her Worship erred by saying that the employer "could not lean on the common law" as the principle that employers can hire and fire at will is part of the underlying law. A District Court Magistrate has no authority to legislate. That is the prerogative of the legislature. Her Worship was obliged to apply the underlying law and erred by failing to do so. As for the amount of damages Ms Tunian argued that K1,000.00 was excessive as any award of damages for wrongful dismissal should be capped by reference to the notice period. The respondent should not have been awarded anything for loss of reputation as there was no evidence he was publicly defamed by anyone.
RESPONDENT'S SUBMISSIONS
11. Mr Oiveka emphasised that this appeal was not a rehearing of the District Court proceedings. The onus is on the appellants to show that the District Court erred and that a substantial miscarriage of justice occurred. They had failed to discharge that onus. Her Worship carefully considered the evidence and reached the conclusion that the respondent faithfully discharged his duties as a counter-sales supervisor. Even if he was wrong for giving the three bags to the unauthorised person, he paid for his mistake by reimbursing the customer. There was no good reason to sack him after that. The appellants are clinging to a draconian rule that PNG inherited through the common law, which gives employers great power over their employees, and says that they can sack an employee for any reason. That is not a fair rule to invoke, especially in this case where the employee acted in good faith and was a victim of circumstances. As to whether the respondent's reputation was affected, there was ample evidence in the District Court, from both the respondent and the first appellant, that other customers besides Mr Hambu became angered. The customers were accusing the first appellant and the staff of stealing their money and being thieves involved in secret deals. The appeal should therefore be dismissed, Mr Oiveka submitted.
THE ISSUES
12. I will address the issues in this way:
FIRST ISSUE: DID THE DISTRICT COURT ERR BY CONCLUDING THAT TERMINATION OF THE RESPONDENT'S EMPLOYMENT WAS UNJUSTIFIED?
13. No. When an employer terminates the employment of an employee for cause under Section 36(1) of the Employment Act, the terminated employee may establish a cause of action in breach of contract if the reasons given for termination are proven not to have existed. The court of first instance – in the present case, the District Court – can examine the reason given for termination and determine whether the facts justify it. Here, the employer's reasons for sacking the employee were clear: he negligently allowed three bags of chicken feed to go out of the store to an unauthorised person, angering the customer who had already paid for them and causing disquiet amongst other customers. In the District Court the employer defended its actions by relying on Section 36(1)(a)(ii) of the Employment Act. The issue therefore became whether the respondent had misconducted himself "by an act of commission that is inconsistent with the due and faithful discharge of his duties". The District Court carefully considered the evidence and concluded that the respondent had not misconducted himself. I cannot detect any error in the way that the District Court reached that conclusion. It was a finding reasonably available on the evidence before it. It might be said that the respondent was gullible in letting the three bags go to someone other than the customer. However, the District Court considered that argument and took into account the evidence that the unauthorised person had been in the store with the customer shortly before getting the three bags. It was not as if the respondent gave the bags to a complete stranger. Moreover, as Mr Oiveka pointed out, even if the respondent was wrong for letting the three bags go, he paid for his mistake by reimbursing the customer. There was no good reason to sack him after that. The District Court's decision was not against the weight the evidence at all.
14. I have great difficulty with the appellants' argument that an employer does not have to have a good reason for sacking an employee. Ms Tunian justifiably raised the argument and there is a lot of authority to support it. However, I favour Mr Oiveka's submission that it is a draconian rule of the common law that has outlived its usefulness. By co-incidence I am, on the same day I hand down the judgment on this appeal, handing down judgments in two other wrongful dismissal cases in which I discuss the inappropriateness of that common law rule. I have over-ruled it and formulated and applied new rules of the underlying law, namely:
15. Those cases are Vitus Sukuramu v NBPOL and Others WS No 1175 of 2003, 16.02.07 and Joe Kala v NBPOL WS No 879 of 2005, 16.02.07. The learned magistrate's reasoning in this case is consistent with those principles. Her Worship formed the view that what happened to the respondent was unjust and unfair and I agree. Even if there is on the face of it good cause to terminate employment the employee must first be given a right to be heard before a considered decision is made. On the evidence before the District Court, the contract of employment was breached by the employer's failure to administer a right to be heard to the respondent before he was sacked. I conclude there was no error of law involved in the District Court's conclusion that termination of the respondent's employment was unjustified.
SECOND ISSUE: DID THE DISTRICT COURT ERR BY MAKING AN EXCESSIVE AWARD OF DAMAGES?
16. No. Losing one's job is invariably a dramatic and often a traumatic event in a person's life, especially in PNG where jobs are scarce and many people other than the employee's immediate family are dependent on the income generated by the job. When a person is wrongfully – ie unlawfully – dismissed, the pain and anguish are magnified. Such a person, in my view, deserves an adequate award of damages to compensate them for the injury to their livelihood and emotions and those of their dependants caused by the wrongful dismissal. There is PNG authority to support Ms Tunian's argument that damages are restricted to the value of foregone wages that would have been earned in the notice period. However, the authorities are not clear-cut. Ms Tunian did not refer me to any Supreme Court decision I am bound to follow. Therefore, I will consider the issue of excessiveness of the award of damages according to the principles I have just expressed.
17. The respondent sought two heads of damages in his statement of claim in the District Court. The first was damages for wrongful termination – which covers the type of injuries outlined above. The second was damages for loss of reputation. I agree with Mr Oiveka that there was sufficient evidence of loss of or at least damage to the respondent's reputation. The inference to be drawn from the evidence is that some people branded him a thief. He was justifiably aggrieved by that. I can detect no error in the way that her Worship arrived at the figure of K1,000.00. It is a nominal sum, hardly over the top given that the second appellant is a prominent corporation with wholesale/retail outlets in many centres throughout the country. By contrast the respondent is an individual citizen whose fortnightly wage, according to the calculation sheet for his finish pay in evidence before the District Court, was K105.60. His annual wage was only K2,745.60. The award of damages was therefore not excessive. On the contrary it was a modest amount, and inadequate in all the circumstances.
THIRD ISSUE: SHOULD THE APPEAL BE ALLOWED?
18. No. Section 230(2) (power of National Court on appeal) of the District Courts Act states:
An appeal shall be allowed only if it appears to the National Court that there has been a substantial miscarriage of justice.
As both grounds of appeal have been dismissed there has been no miscarriage of justice. The appeal will be dismissed.
FOURTH ISSUE: IF THE APPEAL IS DISMISSED, MUST THE NATIONAL COURT LEAVE THE DISTRICT COURT'S ORDERS INTACT?
19. No. Section 230(1) (power of National Court on appeal) of the District Courts Act states:
On the hearing of an appeal, the National Court shall inquire into the matter, and may—
(a) adjourn the hearing from time to time; and
(b) mitigate or increase a penalty or fine; and
(c) affirm, quash or vary the conviction, order or adjudication appealed from, or substitute or make a conviction, order or adjudication which ought, on the evidence before the National Court, to have been made by a District Court; and
(d) remit the case for hearing or for further hearing before the Court which made the conviction, order or adjudication or any other competent court; and
(e) exercise a power that the Court that made the conviction, order or adjudication might have exercised; and
(f) make such further or other order as to costs or otherwise as the case requires. [Emphasis added.]
20. The National Court has power to vary the District Court's orders or to make substitute orders. That power is not subject to the appeal being upheld or a cross-appeal being instituted. I therefore have a broad discretion to exercise. Having considered all the evidence that was before the District Court and reminding myself that I am presiding in a court of Justice, and bearing in mind the relative economic position of the parties and that what is at stake is for one party (the second appellant) not a lot of money but for another party (the respondent) is a significant amount, I am going to increase the award of damages. Section 155(4) (the national judicial system) of the Constitution confers on the National Court an inherent power to make, in such circumstances as seems proper, such orders as are necessary to do justice in the circumstances of a particular case. The sacking of the respondent was in my opinion an injustice. He has had to go the District Court and endure an appeal to the National Court to see that injustice corrected. To do justice in the circumstances of this case, I consider that it is necessary that I double the amount of damages awarded by the District Court.
COSTS
21. I will award costs of this appeal to the respondent. The National Court has the power to make an order for a specific sum of costs. It is not necessary for the costs to be taxed (Egga Pua v Otto Benal Magiten (2005) N2892). The respondent has been ably represented by the Public Solicitor. I will fix the costs at K400.00 and order that that sum be paid within 30 days.
JUDGMENT
22. I will direct entry of judgment in the following terms:
Appeal substantively dismissed; order of District Court quashed and substituted order made.
____________________________________________
Warner Shand Lawyers: Lawyers for the Appellants
Public Solicitor: Lawyer for the Respondent
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/pg/cases/PGNC/2007/196.html