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Dewar v National Airports Corporation Ltd (1-69855) [2021] PGNC 399; N9153 (22 September 2021)

N9153
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1639 OF 2016

BETWEEN
SARAH DEWAR
Plaintiff

AND
NATIONAL AIRPORTS CORPORATION LIMITED (1-69855)
Defendant

Waigani: Makail, J

2021: 7^th July & 22^nd September

LIABILITY – Breach of contract – Repudiation of contract – Contract of employment – Enforceability of contract –Grounds of termination

DAMAGES – Award of damages – Term of contract not performed – Damages restricted to one-year lost salary

Cases Cited:
AGC (Pacific) Limited v. Woo International Pty Ltd [1992] PNGLR 100
Tand v. Newcrest Mine Limited (formerly known as “Lihir Gold Limited”) (2020) N8616

Counsel:

Mr. A. Paru, for Plaintiff
No appearance, for Defendant

JUDGMENT

22^nd September, 2021

1. MAKAIL J: This is a trial on liability and assessment of damages for breach of contract of employment.

2. The plaintiff alleged that on or about 1^st June 2016 she entered into a contract of employment (“Contract”) with the defendant for the position of Chief Financial Officer and General Manager Corporate Services. The term of the contract was for three years commencing on 5^th July 2016. She further alleged that on 30^th September 2016 the defendant unlawfully terminated her without cause and without notice following a restructure of the defendant’s board of directors.

3. The defendant filed a defence and denied liability on the ground that the contract is unenforceable because:

3.1. it was no approved by the board and the former Acting Managing Director Joseph Tupiri did not have the approval of the board to enter into the contract with the plaintiff.

3.2. Mr Tupiri did not have the approval of the board to create the position of Chief Financial Officer and General Manager Corporate Services.

3.3. Mr Tupiri did not have the approval of the board to offer the terms and conditions in the contract to the plaintiff.

3.4. Mr Tupiri did not have the approval of the board to execute the contract with the plaintiff.

3.5. the board did not approve the amendment to the organisation structure of the defendant to facilitate the employment of the plaintiff.

3.6. the board did not approve the plaintiff’s terms and conditions of employment in the contract.

3.7. the board did not offer the plaintiff the position of Chief Financial Controller and General Manager Corporate Services as it did not exist at the relevant time.

3.8. the engagement of the plaintiff was subject to the plaintiff having a valid work permit applied for under Section 18 of the Employment of Non-Citizens Act, 2007.

3.9. the plaintiff did not perform the terms of the contract.

4. The defendant did not tender any evidence to support its defence. Regardless of that, the burden of proof still rests on the plaintiff to prove the cause of action. In that regard, the plaintiff relied on her affidavit sworn on 27^th September 2017 and filed on 29^th September 2017, affidavit of Joseph Tupiri sworn and filed on 18^th April 2018 and affidavit of her counsel Mr Anthony Roden Paru sworn and filed on 23^rd October 2017.

5. From the affidavits, it is noted that as the plaintiff is non-citizen and living in Australia, the defendant assisted her with funds and engaged a private recruitment agency to apply for her work permit under Section 18 of the Employment of Non-Citizens Act 2007. There was no decision made in relation to her application by the time her employment was terminated by the defendant.

6. Regardless of that, it is noted that on 01^st June 2016 the plaintiff and the former Acting Managing Director of the defendant Mr Joseph Tupiri signed a contract for the employment of the plaintiff as Chief Financial Officer and General Manager Corporate Affairs. The term of the contract was three years and commenced on 4^th July 2016. However, it was not performed because the defendant alleged that it was not approved by its board.

7. The real issue is whether the contract is enforceable. The plaintiff submitted that it is enforceable because it was signed by Mr Tupiri in his capacity as the Acting Managing Director of the defendant and he had the apparent or ostensible authority to bind the defendant by contract. She relied on the decision of Sakora AJ (as he then was) in AGC (Pacific) Limited v. Woo International Pty Ltd [1992] PNGLR 100 to support her submission.

8. In the alterative, she submitted that there is evidence to support the proposition that on or about 6^th May 2016 the board of the defendant resolved at its meeting to amend the defendant’s organisational structure to facilitate her employment to the position of Chief Financial Officer and General Manager Corporate Services. Mr Tupiri corroborated her evidence although her application to have the board meeting resolution of 6^th May 2016 tendered to corroborate her evidence was refused by the Court in an earlier hearing on the grounds that it was privileged.

9. I reject the plaintiff’s submission that Mr Tupiri as the Acting Managing Director of the defendant had apparent or ostensible authority to enter into the contract on behalf of the defendant and the defendant is bound by the contract. I reject this submission because the decision to employ the plaintiff in the corporate organisation of the defendant is a significant corporate organisational decision. It would involve the creation of the position, if one did not exist, commitment and expansion of funds and recruitment of a suitably qualified person to take up the position.

10. Moreover, the position of Chief Financial Officer and General Manager Corporate Services itself calls for a collective decision to be made rather than unilaterally by an individual because of its significance in the corporate structure of the defendant.

11. In my view, a collective decision in the form of a board decision would not only reinforce the significance of the decision but also the position within the corporate structure of the defendant. Such a board decision would cover:

(a) the creation of the position of Chief Financial Officer and General Manager Corporate Services.

(b) an offer of the terms and conditions in the contract to the plaintiff.

(c) approval for Mr Tupiri to execute the contract on behalf of the defendant with the plaintiff.

12. Proof of these matters will establish a valid and enforceable contract between the parties. In that regard, while there is no evidence of a board resolution to support the plaintiff’s alternative submission, there is evidence from Mr Tupiri at para. 3 of his affidavit stating that:

“On or about 6 May 2016, the Defendant’s Board of Directors, of which I was a part, met and resolved to amend the Defendant Company’s organisational structure which facilitated the Plaintiff’s employment to the position of General Manager Corporate Services and Chief Financial Officer. Also, during this meeting the Defendant Company’s Board approved the terms of the Plaintiff’s Contract of Employment.”

13. Mr Tupiri was part of that meeting which approved the amendment to the defendant’s organisational structure to include the position of Chief Financial Officer and General Manager Corporate Services. Further, in that same meeting, the board approved the terms of the plaintiff’s contract of employment. This is direct evidence of what transpired on or about 6^th May 2016 and is sufficient to rely on to find that there was a board resolution approving these matters which the defendant has denied.

14. Save for the letter of termination by Mr Richard Yopo as the new Acting Managing Director to the plaintiff dated 30^th September 2016 where it alleged that“.......there is no Board approved position of CFO and GM Corporate Services in the organisational structure of NAC at present” and “that your appointment to that position was not made by the Board”, there is no evidence by affidavit from Mr Yopo that he was present on 6^th May 2016 and observed that there was no board meeting and furthermore, how it came to his knowledge that there was no board meeting on that date. In addition, there is no evidence of a board resolution rescinding the board decision of 6^th May 2016.

15. For these reasons, I find that the board of the defendant approved the amendment to the organisational structure of the defendant to include the position of Chief Financial Officer and General Manager Corporate Services and further approved the terms of the contract in the contract of employment for the plaintiff. Consequently, I find that there is a valid and enforceable contract between the parties.

16. The next issue is whether the defendant breached the contract. The plaintiff submitted that her termination by the defendant was unlawful because it was without cause and without notice contrary to clause 17 of the contract which states in part:

“Employment may be terminated by the Company summarily (without notice or payment in lieu of notice pursuant to Clause 19”.

17. As found, there is no evidence to support the reason for the plaintiff’s termination contained in the letter by Mr Yopo to the plaintiff dated 30^th September 2016. While the said letter constituted a notice under clause 17, the termination is without cause and contrary to clause 17. Consequently, the defendant breached the contract, and the termination is unlawful.

18. The final issue is the sum to award as damages for the breach. It is noted that according to the orders sought in the statement of claim, the plaintiff sought damages in the total sum of AU$321,896.82 which comprised of 12 months’ salary in lieu of notice (AU$200,000.00), bonus entitlements of 40% of base salary (AU$80,000.00), superannuation of employer’s contribution of 8.4% for 12 months (AU$25,458.46) and annual leave entitlements for 30 days (AU$16,438.36).

19. According to the plaintiff, the sum of AU$321,896.82 is arrived at based on clause 17 of the contract which states in part: “..........the Company shall pay the Employee all the entitlements under this Agreement, subject to a maximum of 12 months”, and clause 19 states that “upon termination, the Company shall pay to the Employee all benefits and entitlements due to the Employee pursuant to this Agreement”.

20. In the alternative, the plaintiff sought damages in the total sum of AU$140,474.21 which comprised 3 months’ salary in lieu of notice (AU$50,000.00), bonus entitlements of 40% of base salary (AU$80,000.00), superannuation of employer’s contribution of 8.4% for 3 months (AU$6,364.62) and annual leave entitlements for 30 days (AU$4,109.59).

21. The plaintiff submitted that the sum of AU$140,474.21 is based on clause 17(b) of the contract which states “Employment may be terminated by the Company paying the Employee three month’s salary in lieu of three (s) months’ notice”.

22. However, it is significant to note damages may be awarded in the options put forward by the plaintiff where she has performed the terms of the contract. In this case, the plaintiff did not perform the terms of the contract because the new board and new management under Mr Yopo formed a different view in relation to her engagement and resisted her engagement. The defendant, in actual fact, repudiated the contract before the plaintiff commenced employment, a case similar to Tand v. Newcrest Mine Limited (formerly known as “Lihir Gold Limited”) (2020) N8616. In that case, the plaintiff did not start work, including his probation for three months with the defendant when the position was withdrawn. The plaintiff was awarded damages for one-year lost salary.

23. In my view, given that the plaintiff did not perform the terms of the contract or in other words, work, her damages will be restricted to one-year lost salary and no more. Her annual base salary is AU$200,000.00. I award this sum.

24. The final judgment and orders of the Court are judgment on liability is entered against the defendant and the defendant shall pay to the plaintiff a sum of AU$200,000.00 as one-year lost salary forthwith. Finally, the defendant shall pay the costs of the proceeding, on a party/party basis to be taxed, if not agreed.
________________________________________________________________
O’Briens Lawyers: Lawyers for Plaintiff
Manase & Co Lawyers: Lawyers for Defendant