Feria v Lange [2009] PGNC 4; N3574 (27 January 2009)

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ENTITLEMENTS ON COMPLETION OF PUBLIC EMPLOYMENT – damages – breach of separation procedures – Public Service General Orders.

A public servant reached the age of retirement but his employing department breached the procedures under the Public Service General Orders by failing to give him proper notice of his retirement. He kept working for more than a year beyond the age of retirement before being taken off the payroll. He was offered a retirement package but the calculation was not explained to him and he claimed that he was underpaid. He commenced court proceedings and obtained a summary judgment against the defendants. This is the trial on assessment of his entitlements and damages.

Areng v National Housing Corporation (2008) N3469
Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24

HRD – human resource development
J – Justice
K – Kina
Ltd – Limited
MILOF – money in lieu of furlough
MILOL – money in lieu of leave
MILON – money in lieu of notice
N – National Court judgment
No – number
PNGLR – Papua New Guinea Law Reports
Pty – Proprietary
v – versus
WS – Writ of Summons

1. CANNINGS J: The plaintiff, Mr Paschal William Feria, was a long-serving public servant. For almost 40 years he worked for the Department of Agriculture or its affiliates, the last 30 years in Madang Province. He reached the age of retirement of 60 years in August 2003. But no action was taken by his employing department to ask or force him to retire. He continued to work until he was removed from the payroll in January 2005.

2. The Public Service General Orders contain detailed procedures about what should happen when a public servant reaches the age of retirement. Mr Feria claims that these procedures were breached in his case. He was eventually offered a retirement package but the sum offered to him was well below what he was expecting. The calculation was not explained to him and he claimed that he was underpaid. He commenced court proceedings and in November 2006 obtained a summary judgment against the defendants. The judgment determined the issue of liability, i.e. it established that the defendants are liable to Mr Feria for unpaid entitlements and damages. A trial has been held to assess the actual amounts payable.

3. Mr Feria is claiming 11 categories of payments, totalling approximately K500, 000.00.

4. I am not satisfied that the first three defendants have been given proper notice of these proceedings. So I will only assess damages against the fourth defendant, the State.

5. Mr Feria claims that because he was not given a proper retirement notice, he should be paid three months money in lieu of notice, of K6, 179.87.

6. I reject this claim. Though proper procedures were not followed, it should have been obvious to him that he had to retire when he turned 60.

7. Mr Feria has given evidence that he took no recreation leave after 1998. he claims K11, 282.21.

9. Mr Feria has given evidence that he did not take any furlough leave during his entire public service career. He claims K46, 177.67.

11. Mr Feria claims gratuity for two contract periods: 31 January 1998 to 31 January 2001 and 31 January 2001 to 31 January 2004. He claims K21, 727.74.

13. Mr Feria is from Rabundokum village in the Saussia area of East Sepik Province. He is claiming K3, 267.46 under the repatriation provisions of the Public Service General Orders.

15. Mr Feria is claiming an ex gratia payment of K49, 438.29. His counsel, Mr Akuani, has told the court that he is aware that there is no provision for this sort of payment in the Public Service General Orders. Nevertheless Mr Feria wants to persist with the claim as he has served the State with loyalty and dedication for 40 years and feels that it is only fair that he be given an ex gratia payment.

16. This is not a proper claim. This case is a determination of Mr Feria’s lawful entitlements. The court is in no position to award ex gratia amounts. There is provision for such payments under the Public Finances (Management) Act, which should only be made on a case-by-case basis following the careful and considered exercise of discretion by the Minister.

17. Mr Akuani submits that Mr Feria was wrongly taken off the payroll in January 2005. He should have remained on the payroll at least until July 2008. The sum of K110, 268.34 is claimed.

18. I reject this claim. Though proper procedures were not followed, it should have been obvious to Mr Feria that he had to retire when he turned 60. He was paid for more than 12 months after he should have stopped work. After he was taken off the payroll in January 2005, he stopped working. He ought not to be paid salary for the period in which he was not working.

20. This is not the correct part of the trial to seek or award costs. The question of costs is dealt with at the end of a trial, not jumbled together with other claims. I reject this claim.

21. Mr Feria is claiming for two categories of damages. First, for defamation based on a letter the first defendant, Mr Lange, wrote to Mr Feria in December 2004, in which he stated, amongst other things: "Your final entitlements have already been paid". The sum of K60, 000.00 is claimed.

22. Secondly, for hardship and suffering he has endured in the period since he was taken off the payroll in January 2005. The sum of K80, 000.00 is claimed.

23. As for the defamation claim, I fail to see any merit in the proposition that Mr Lange’s letter is defamatory. I reject this aspect of the damages claim.

24. As for hardship and suffering, I can appreciate how Mr Feria, who is now 65 years old, has suffered during the period since he was taken off the payroll in January 2005. No one has been communicating with him effectively. He has been denied the recognition and appreciation that should have been afforded to someone who served the Government for so long. He has been given shabby treatment. It is only fair that he be compensated for that.

25. I will award the same amount of damages for the distress and frustration endured on account of inefficiency, administrative incompetence and continued bureaucratic bungling, that I awarded in Areng v National Housing Corporation (2008) N3469.

26. Mr Feria is saying that if his retirement benefits had been worked out properly and if his time were not occupied with trying to sort out things with his former employer, he could have sought employment elsewhere or gone into business such as a PMV operation. He claims K68, 500.00.

27. Given Mr Feria’s age, I do not think this is a reasonable claim. If he really wanted to devote his time and energies to further employment or a business venture, he could have done so. I refuse this claim.

28. Mr Feria is seeking exemplary damages of K40, 000.00, as a form of punishment of the defendants for their tardiness.

29. As the fourth defendant is the State and the other three defendants are agents of the State, all defendants have the protection of Section 12(1) of the Claims By and Against the State Act 1996, which states:

No exemplary damages may be awarded against the State unless it appears to the court that, regardless of the nature of the claim, there has been a breach of Constitutional rights so severe or continuous as to warrant an award of exemplary damages.

30. Mr Feria’s claim is not based on a breach of constitutional rights so nothing can be awarded for exemplary damages. I refuse this claim.

No	Category of claim	Amount claimed (K)	Amount awarded (K)
1	MILON	6,179.87	0
2	MILOL	11,282.21	11,282.21
3	MILOF	46,177.67	46,177.67
4	Contract gratuity	21,727.74	21,727.74
5	Repatriation costs	3,267.46	3,267.46
6	Ex gratia	49,438.29	0
7	Lost salary	110,268.34	0
8	Legal costs	25,000.00	0
9	Damages	140,000.00	30,000.00
10	Loss of future earnings	68,500.00	0
11	Exemplary damages	40,000.00	0
	Total	521,841.58	112,455.08

31. In the statement of claim the plaintiff claimed interest. The relevant law is Section 1(1) of the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52, which states:

Subject to Section 2, in proceedings in a court for the recovery of a debt or damages the court may order that there be included in the sum for which judgment is given interest, at such rate as it thinks proper, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.

32. As Bredmeyer J pointed out in Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24, this section confers a four-fold discretion on the Judge: (1) whether to grant interest at all; (2) to fix the rate; (3) to grant interest on the whole or part of the debt or damages for which judgment has been given; and (4) to fix the period for which interest will run.

1 A plaintiff should in the normal course of events receive interest. There is nothing that takes this case out of the ordinary in that regard. The Court will order that interest be included in the sum for which judgment is given.

2 The rate of interest commonly used is 8%. In view of current economic conditions in the country I think 8% is the proper rate of interest.

3 Interest should be payable on the whole of the sum of damages for which judgment is given.

4 I regard the commencement date for the appropriate period will be when the cause of action accrued, when the plaintiff was removed from the payroll, 19 January 2005. The end of the period is the date of judgment, 27 January 2009. The appropriate period, for the sake of mathematical convenience, is 4 years.

35. The general rule is that costs follow the event, i.e. the successful party has its costs paid for by the losing party on a party-to-party basis. The question of costs is a discretionary matter. There are no special circumstances in this case that warrant departure from the general rule.

William Akuani Lawyers: Lawyers for the Plaintiff
Solicitor-General: Lawyer for the Defendants

National Court of Papua New Guinea

Feria v Lange [2009] PGNC 4; N3574 (27 January 2009)