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Yawai v Jant Ltd [2014] PGNC 271; N5729 (15 September 2014)

N5729

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 855 OF 2013

MICHAEL YAWAI
First Plaintiff

JOHN SIWI
Second Plaintiff

GORDON KORUS
Third Plaintiff

HARRY LIEKIN
Fourth Plaintiff

MANARI MUNDARI
Fifth Plaintiff

V

JANT LIMITED
Defendant

Madang: Cannings J
2014: 16 May, 8, 11 July, 15 September

LAW OF EMPLOYMENT – oral contracts of service – whether employees were forced to resign – whether contracts of employment were terminated by mutual agreement: Employment Act, Section 35(1)– final entitlements of employee on termination of contract of employment – whether employer obliged to pay repatriation expenses: Employment Act, Section 40 (repatriation on expiry etc of contract)

The five plaintiffs are former employees of the defendant. They commenced proceedings, claiming damages against the defendant for breach of their contracts of employment. Each plaintiff claimed that the defendant breached his contract by forcing him to resign and under-paying his final entitlements, including repatriation expenses and long service leave. The defendant denied liability. A trial was conducted on the issue of liability.

Held:

(1) In respect of the first and second plaintiffs, a cause of action in breach of contract was established in that the defendant failed to pay to each of them, repatriation expenses under Section 40(1) of the Employment Act.

(2) In respect of the third, fourth and fifth plaintiffs, no cause of action has been established.

(3) The proceedings shall continue with a trial on assessment of damages in respect of the first and second plaintiffs.

Cases cited

The following cases are cited in the judgment:

Aquip Pty Ltd v Galo Gastronuevo [1987] PNGLR 491
Thomas Cholai & 3 Ors v Jant Ltd (2014) N5506

STATEMENT OF CLAIM

These were proceedings in which five persons sought to establish liability in damages for breach of their contracts of employment.

Counsel

J Morog, for the plaintiffs
B B Wak, for the defendant

15th September, 2014

1. CANNINGS J: The five plaintiffs are former employees of the defendant, Jant Ltd. They ceased employment on various dates in 2011 or 2012. They commenced proceedings in 2013, claiming damages against the defendant for breach of their respective contracts of employment. None of their contracts was in writing. Each plaintiff was employed under an oral contract of service for the purposes of Division III.3 of the Employment Act Chapter No 373. All plaintiffs claimed that the defendant breached the contract by forcing them to resign and under-paying their final entitlements. The defendant denies liability.

2. I will take the same approach to determination of liability as in the recent case of Thomas Cholai & 3 Ors v Jant Ltd (2014) N5506. Each of the plaintiff's claims will be addressed in turn, the primary question in each case being whether the plaintiff has established a cause of action in breach of contract. Each plaintiff has sworn an affidavit deposing to the facts in support of their claim. The defendant's Administration Manager Wu Jui-Che has sworn an affidavit that sets out facts to support the defendant's opposition to each claim. All affidavits have been admitted into evidence with the consent of the parties and without cross-examination of the deponents.

THE FIRST PLAINTIFF, MICHAEL YAWAI

Plaintiff's claims

3. He states that he started work with the defendant in 1976 as a plant fitter in the chip-mill workshop. He was recruited from his home, Areng village, East Sepik Province. In July 2011 he was forced to resign and forced to sign a memorandum of agreement to give effect to his purported resignation. He was at that time only 53 years old and did not wish to retire.

4. Mr Morog for the plaintiff submitted that by forcing the first plaintiff to resign the defendant had terminated his employment without notice or cause. The defendant only paid him K4,271.04 in final entitlements, which does not reflect his 35 years of service.

Defendant's response

5. The defendant denies that the first plaintiff was recruited from East Sepik. Mr Wu states that he was recruited in Madang. The defendant denies that it forced him to resign and states that the defendant began winding down its operations in 2009 and that by 2011 all employees had been informed and were aware of the situation. The first plaintiff of his free will signed two memoranda of agreement with the defendant, dated 20 July 2011 and 11 January 2012, regarding termination of his employment. He was conferred generous benefits including two months pay in lieu of notice and being allowed to remain in a company house rent-free until 31 December 2011 and then for K300.00 per month after that. During his period of employment from 1976 to 2011 he received two amounts of long service leave, in 1991 and 2007.

Determination

6. I accept the evidence of the first plaintiff as to his place of recruitment. I reject his evidence of forced resignation. There is insufficient evidence to support that assertion. I accept the evidence of Mr Wu that by 2011 all Jant employees knew that the company was down-sizing and that most of them would be redundant. The memoranda of agreement provide evidence of termination of the contract of employment by mutual agreement in accordance with Section 35(1) (termination of contract without notice) of the Employment Act, which states:

An employer and an employee may mutually agree to terminate a contract of service with or without notice.

7. As to the alleged underpayment of final entitlements I find that, with the exception of the claim for repatriation expenses, the calculation by the defendant was correct.

8. However, the first plaintiff has established a cause of action in breach of contract by proving that the defendant failed to pay repatriation expenses under Section 40(1) (repatriation on expiry, etc of contract) of the Employment Act, which states:

Subject to Section 43, where an employee has been brought to the place of employment by–

(a) the employer; or

(b) an employment agent or a worker-recruiter acting on behalf of the employer,

the employer shall pay the expenses of repatriating the employee to the place from which he was brought–

(c) on the expiry of the period of service specified in the contract of service; or

(d) on the termination of the contract–

(i) by agreement between the parties; or

(ii) by reason of the inability, refusal or neglect of the employer to comply with all or any of the provisions of the contract; or

(iii) by the employee under Section 36(2); or

(iv) by reason of the inability of the employee to comply with the provisions of the contract on account of illness or accident where the employee produces to the employer a certificate of a medical practitioner or other acceptable medical certificate certifying as to the inability of the employee to comply with the provisions of the contract.

I find that the "the place from which he was brought" is Areng village, East Sepik Province.

THE SECOND PLAINTIFF, GORDON KORUS

Plaintiff's claims

9. He states that he started work with the defendant on 28 October 2001 as a motor mechanic. He was recruited from his home in the Autonomous Region of Bougainville. He was forced to resign and forced on 14 September 2011 to sign a memorandum of agreement to give effect to his purported resignation.

10. Mr Morog submitted that by forcing him to resign the defendant had terminated the second plaintiff's employment without notice or cause. The defendant only paid him K2,207.56 in final entitlements, which does not reflect his almost ten years of service.

Defendant's response

11. The defendant denies that the second plaintiff was recruited from Bougainville. Mr Wu states that he was recruited in Madang. The defendant denies that it forced him to resign and states that the defendant began winding down its operations in 2009 and that by 2011 all employees had been informed and were aware of the situation. The second plaintiff of his free will signed the memorandum of agreement with the defendant regarding termination of his employment. He was conferred generous benefits including one month pay in lieu of notice and being allowed to remain in a company house rent-free until 31 December 2011.

Determination

12. I accept the evidence of the second plaintiff as to his place of recruitment. I reject his evidence of forced resignation. There is insufficient evidence to support that assertion. I accept the evidence of Mr Wu that by 2011 all Jant employees knew that the company was down-sizing and that most of them would be redundant. The memorandum of agreement provides evidence of termination of the contract of employment by mutual agreement in accordance with Section 35(1) of the Employment Act. As to the alleged underpayment of final entitlements I find that, with the exception of the claim for repatriation expenses, the calculation by the defendant was correct.

13. However, the second plaintiff has established a cause of action in breach of contract by proving that the defendant failed to pay repatriation expenses under Section 40(1) of the Employment Act. I find that the "the place from which he was brought" is the Autonomous Region of Bougainville.

THE THIRD PLAINTIFF, JOHN SIWI

Plaintiff's claims

14. He states that he started work with the defendant on 20 December 1988. He has given no evidence as to his place of recruitment. He states that was forced to retire and forced to sign a memorandum of agreement dated 11 July 2011 to give effect to his purported retirement.

15. Mr Morog submitted that by forcing him to retire the defendant had terminated the third plaintiff's employment without notice or cause. The defendant only paid him K2,906.00 in final entitlements, which does not reflect his almost 25 years of service.

Defendant's response

16. The defendant denies that it forced the third plaintiff to resign and states that the defendant began winding down its operations in 2009 and that by 2011 all employees had been informed and were aware of the situation. The third plaintiff of his free will signed the memorandum of agreement with the defendant regarding termination of his employment. He was conferred generous benefits including two months pay in lieu of notice and being allowed to remain in a company house rent-free until 31 December 2011.

Determination

17. I infer from the absence of evidence of the third plaintiff's place of recruitment that he was recruited from Madang town. I reject his evidence of forced retirement. There is insufficient evidence to support that assertion. I accept the evidence of Mr Wu that by 2011 all Jant employees knew that the company was down-sizing and that most of them would be redundant. The memorandum of agreement provides evidence of termination of the contract of employment by mutual agreement in accordance with Section 35(1) of the Employment Act. As to the alleged underpayment of final entitlements I note that the third plaintiff was paid an amount of long service leave in 2003. I find that the calculation by the defendant was correct. The third plaintiff has failed to establish a cause of action in breach of contract.

THE FOURTH PLAINTIFF, HARRY LIEKEN

Plaintiff's claims

18. He states that he started work with the defendant on 15 April 1991 as a chip-mill handyman and was promoted to the position of payload operator in 1991. He was injured at work in 2009 but continued to work as the injury was not serious. He was forced to resign and forced on 24 May 2011 to sign a memorandum of agreement to give effect to his purported resignation, which falsely stated that he agreed to resign on medical grounds.

19. Mr Morog submitted that by forcing him to resign the defendant had terminated the fourth plaintiff's employment without notice or cause. The defendant only paid him K1,900.00 in final entitlements, which does not reflect his 22 years of service.

Defendant's response

20. The defendant denies that it forced the fourth plaintiff to resign and states that the defendant began winding down its operations in 2009 and that by 2011 all employees had been informed and were aware of the situation. The third plaintiff of his free will signed the memorandum of agreement with the defendant regarding termination of his employment. He was conferred generous benefits including two months pay in lieu of notice and being allowed to remain in a company house rent-free until 13 January 2012.

Determination

21. I infer from the absence of evidence of the fourth plaintiff's place of recruitment that he was recruited from Madang town. I reject his evidence of forced retirement. There is insufficient evidence to support that assertion. I accept the evidence of Mr Wu that by 2011 all Jant employees knew that the company was down-sizing and that most of them would be redundant. The memorandum of agreement provides evidence of termination of the contract of employment by mutual agreement in accordance with Section 35(1) of the Evidence Act. As to the alleged underpayment of final entitlements I note that the fourth plaintiff was paid an amount of long service leave in 2006. I find that calculation by the defendant was correct. The fourth plaintiff has failed to establish a cause of action in breach of contract.

THE FIFTH PLAINTIFF, MANARI MUNDARI

Plaintiff's claims

22. He states that he started work with the defendant on 2 February 1996 as a welder. He took up an apprenticeship with the defendant in February 2007, however the defendant forced him to resign before he had completed his apprenticeship and forced him on 24 August 2012 to sign a memorandum of agreement to give effect to his purported resignation.

23. Mr Morog submitted that by forcing him to resign the defendant had terminated the fifth plaintiff's employment without notice or cause. The defendant only paid him K277.00 in final entitlements, which does not reflect his 16 years of service.

Defendant's response

24. The defendant denies that it forced the fifth plaintiff to resign and states that the defendant began winding down its operations in 2009 and that by 2011 all employees had been informed and were aware of the situation. The fifth plaintiff of his free will signed the memorandum of agreement with the defendant regarding termination of his employment. His apprenticeship was transferred to Lutheran Shipping and he was conferred generous benefits including being allowed to remain in a company house rent-free until 21 September 2012.

Determination

25. I infer from the absence of evidence of the fifth plaintiff's place of recruitment that he was recruited from Madang town. I reject his evidence of forced resignation. There is insufficient evidence to support that assertion. I accept the evidence of Mr Wu that by 2011 all Jant employees knew that the company was down-sizing and that most of them would be redundant. The memorandum of agreement provides evidence of termination of the contract of employment by mutual agreement in accordance with Section 35(1) (termination of contract without notice) of the Employment Act. As to the alleged underpayment of final entitlements I note that the fifth plaintiff was paid an amount of long service leave in 2011. I find that calculation by the defendant of the figure of K277.60 was correct. The fifth plaintiff has failed to establish a cause of action in breach of contract.

CONCLUSION

26. This has been a trial on liability and I have determined that the first and second plaintiffs have established a cause of action in breach of contract, the breach in each case consisting of a failure to pay repatriation expenses to the place of recruitment. The third, fourth and fifth defendants have failed to establish liability. There will be now a trial on assessment of damages in respect of the claims of the first and second plaintiffs. As I indicated in Thomas Cholai & 3 Ors v Jant Ltd (2014) N5506 my tentative view is that repatriation expenses are, at the election of the employee, payable in cash or kind, that being the approach taken by Barnett AJ in Aquip Pty Ltd v Galo Gastronuevo [1987] PNGLR 491. As for costs, I will make no order at this stage. This is something on which the parties might also be able to agree. Failing agreement, it can be the subject of argument at the next trial.

ORDER

(1) In respect of the first plaintiff, a cause of action in breach of contract has been established in that the defendant failed to pay repatriation expenses under Section 40(1) of the Employment Act, in respect of the "place from which he was brought", Areng village, East Sepik Province.

(2) In respect of the second plaintiff, a cause of action in breach of contract has been established in that the defendant failed to pay repatriation expenses under Section 40(1) of the Employment Act, in respect of the "place from which he was brought", the Autonomous Region of Bougainville.

(3) In respect of the third, fourth and fifth plaintiffs, no cause of action has been established.

(4) For the avoidance of doubt the order of 16 August 2013 continues until further order of the Court.

(5) The proceedings shall continue, subject to any agreement by the parties to the contrary, to a trial on assessment of damages and unpaid entitlements, the assessment of such sums to be determined in accordance with the above declarations of liability.

(6) The question of costs is reserved for agreement or further argument.

Judgment accordingly.
_______________________________________________________________
Public Solicitor: Lawyers for the Plaintiffs
Kunai & Co Lawyers: Lawyers for the Defendant