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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO 224 OF 2018
BETWEEN
JOSEPH KUMASI
Plaintiff
AND
AIR NIUGINI LIMITED TRADING AS AIR NIUGINI
Defendant
Waigani: Makail, J
2022: 2nd December
2024: 7th June
LIABILITY – Breach of contract – Contract of employment – Non-payment of superannuation funds – Proof of – Liability established
LIABILITY – Misrepresentation – Representation of payment of contribution to superannuation – Non-payment of superannuation contribution – Proof of – Liability established – Superannuation (General Provisions) Act, 2000 – Sections 3(1), 76 & 82
CAUSE OF ACTION – Defence of statute barred – Accrual of cause of action – Action for statutory entitlement – Cause of action accrued at cessation of employment – Superannuation (General Provisions) Act, 2000 – Section 76 – Frauds and Limitations Act, 1988 – Section 16
DAMAGES – Assessment of damages for breach of contract – Award of 8.4% superannuation contribution – Superannuation (General Provisions) Act, 2000 – Section 76
Cases Cited:
Papua New Guinea Cases
Misima Mines Ltd v. Collector of Customs (2007) N3206
Mathias Goma & 703 Others v. Protect Security & Communication Limited (2013) SC1300
Anave Ona v. National Housing Corporation (2009) SC995
Brian Hodson v. The State [1985] PNGLR 303
Harding v. Teperoi Timbers Pty Ltd [1988-89] PNGLR 128
Overseas Cases
Codeifa Construction Pty Ltd v. State Rail Authority (1980-81) 149 CLR 352
Reardon Smith Line Ltd v. Yngvar Hansen-Tangen [1976] 1 WLR 989
Counsel:
Mr J Holingu with Mr L Agdop, for Plaintiff
Mr I Molloy with Mr C Jospeh, for Defendant
JUDGMENT
7th June 2024
1. MAKAIL J: The plaintiff is a former pilot and captain of the defendant. He sues the defendant for breach of contract and misrepresentation.
Allegations of Breach of Contract
2. Reading the following in the statement of claim at:
(a) paragraphs 7 to 11, the plaintiff alleges that in his capacity as President of the National Air Pilots Union (“NAPU”) and on behalf of NAPU and the defendant entered into an Agreement on 1st July 2008 referred to herein as the 2008 Agreement for the “Same Job Same Pay” structure for the citizen and non-citizen pilots of the defendant.
(b) paragraph 11, the plaintiff alleges that upon the expiry of the 2008 Agreement, in 2012, the Agreement was extended. The agreement was titled “Air Niugini Pilots (Non-Cadets Pilots) Agreement 2012, referred to herein as the 2012 Agreement.
(c) paragraph 12, the plaintiff alleges that upon the expiry of the 2012 Agreement, he and the defendant entered into a Contract of Employment titled “Air Niugini Pilots Contract 2015” referred to herein as the 2015 Contract.
(d) paragraph 13, the plaintiff alleges that he was terminated from his employment by the defendant on 15th September 2016.
(e) paragraph 14, the plaintiff alleges that it was a term of the 2008 Agreement, the 2012 Agreement and the 2015 Contract that he and other citizen air pilots’ salary included 8.4% superannuation contribution to the National Superannuation Fund Limited (“NasFund”) from the defendant as their employer.
(i) Clause 7.7 of the 2008 Agreement states:
“The Employer and Employee contribution towards NasFund shall be consistent with the Superannuation Act, Salary package stated in appendix A is deemed inclusive of the Employer’s contribution to the Superannuation, rates applicable and varied from time to time by the Superannuation Act.”
(ii) Clause 7.8 of the 2012 Agreement states:
“The Employer and Employee contribution towards NasFund shall be consistent with the Superannuation Act, Salary package stated in appendix A is deemed inclusive of the Employer’s contribution to the Superannuation, rates applicable from time to time.”
(iii) Clause 4.10 of the 2015 Contract states:
“The Employer and Employee contribution towards NasFund shall be consistent with the Superannuation Act, Salary package stated in appendix A is deemed inclusive of the Employer’s contribution to the Superannuation, rates applicable and varied from time to time by the Superannuation Act. This is only applicable to Citizen pilots.”
(f) at paragraph 15, the plaintiff alleges that the defendant breached clause 7.7 of the 2008 Agreement, clause 7.8 of the 2012 Agreement and clause 4.10 of the 2015 Contract when it did not or failed to pay 8.4% contribution to the NasFund.
(g) further, at paragraph 15, the plaintiff alleges that the defendant breached Section 76(1) and (2) of the Superannuation (General Provisions) Act, 2000 (“Superannuation Act”) which provides for the defendant as the employer to make contribution to an Authorised Superannuation Fund (“ASF”) in respect of employees and that contribution shall be made out of the property of the employer and the defendant did not or failed to pay 8.4% contribution to the NasFund.
(h) furthermore, at paragraph 15, the plaintiff alleges that the defendant breached Section 82 of the Superannuation (General Provisions) Act 2000 which provides for all employers not to reduce, directly or indirectly, the wages, salary or other remuneration or benefits to which an employee is entitled under a contract of employment or any other law by reason of its liability to mandatory contribution and the defendant did not or failed to pay 8.4% contribution to the NasFund.
Allegations of Misrepresentation
3. Reading the following in the statement of claim at:
(a) at paragraphs 4 to 6, the plaintiff alleges that in early 2008 the defendant introduced a “Same Job Same Pay” structure for citizen and non-citizen pilots working for it. This was intended to stop exodus of citizen pilots from its employ. During negotiations and drawing up of contracts for the plaintiff and other citizen pilots, the Chief Executive Officer of the defendant Mr Wasantha Kumarasiri directed that the employer’s mandatory superannuation contribution of 8.4% be included in the salary of the plaintiff and other citizen pilots. The reason was, to avoid citizen pilots earning 8.4% more than the non-citizen pilots because non-citizen pilots are not entitled to employer’s portion of superannuation contribution.
(b) at paragraph 16, the defendant mispresented to him that 8.4% contribution to the NasFund is being paid when:
(i) it deducted the monies from his salary and paid the monies to NasFund as its own employer’s contribution, and
(ii) circumventing its mandatory duty to pay the employer’s contributions by deducting from the plaintiff’s salary and using them as its own employer’s contribution to NasFund, and
(iii) reducing the plaintiff’s salary in the guise of citizen pilots earning 8.4% more than non-citizen pilots. In effect, it is an indirect way to reduce its liability to pay mandatory employer’s contribution.
Allegations of Loss
4. Reading paragraph 17, the plaintiff alleges that he suffered:
(a) loss of 8.4% of his salary from 1st July 2008 to date of his termination from employment of 15th September 2015.
(b) reduced employer contribution made for him to NasFund from 1st July 2008 to date of his termination from employment of 15th September 2015.
(c) loss of relevant cumulative interest declared and paid by NasFund to members from July 2008 to 4th August 2017 when his salary was last paid.
Defendant’s Defence
5. Pursuant to an amended defence filed with leave of the Court on 10th December 2021, the defendant denies the allegations of breach of agreement, and contract and misrepresentation. In addition, it alleges that the action is statute barred because it was commenced outside six years from the date of accrual of cause of action.
Evidence
6. The plaintiff tendered the following:
(a) His affidavit sworn and filed on 5th April 2022 (Exhibit “P1”).
(b) His affidavit sworn on 6th April 2022 and filed 11th April 2022 (Exhibit “P2”).
(c) His affidavit sworn on 14th July 2022 and filed 15th July 2022 (Exhibit “P3”).
7. The defendant tendered the following:
(a) Affidavit of Captain Samiu Taufa sworn and filed on 4th April 2022 (Exhibit “D1”).
(b) Affidavit of Captain Samui Taufa sworn and filed on 14th April 2022 (Exhibit “D2”).
Analyses of Evidence
8. The defence counsel cross-examined the plaintiff. The questions were purposely to elicit from the plaintiff an admission that he had delayed pursuing the claim for non-payment of 8.4% contribution with the defendant such that his claim is without merit. According to the defence, this was because the defendant had pay 8.4% contribution to the NasFund. The plaintiff’s explanation was that as he was a lay person he did not know that it was a statutory requirement under the Superannuation Act for the defendant to make contributions to the NasFund.
9. Other than this, the plaintiff’s assertions in relation to the “Same Job Same Pay” structure of the defendant for citizen and non-citizen pilots, adoption of the equal pay policy structure in the 2008 Agreement, the 2012 Agreement and 2015 Contract and rate of 8.4% contribution by the defendant to NasFund are reinforced by Captain Taufa in his two affidavits and uncontroversial.
10. Briefly, Captain Taufa reinforces the plaintiff’s assertions by deposing that during negotiations, the defendant agreed that the benefits of the citizen pilots should be calculated to equate with what the non-citizen pilots were being paid. As superannuation contributions were not paid in respect of the non-citizen pilots, but were payable in respect of citizen pilots, it was necessary to factor in the employer superannuation contributions in calculating what should be paid to the citizen pilots in order to maintain parity in benefits between the citizen pilots and the non-citizen pilots. Accordingly, the ‘gross amount’ or the total benefits payable to the citizen pilots, for the purpose of calculating the benefits received by the citizen pilots, included the employer superannuation contributions. It was not agreed that the employer contribution would be deducted from the pilot’s salary.
Findings of Fact
11. For these reasons, the Court makes the following findings of fact, the plaintiff commenced employment with the defendant on 9th January 1995 as a pilot. After more than 20 years of service, his employment was terminated on 15th September 2016. The defendant used to have a dual pay or salary system whereby citizen pilots were paid less than their counterpart non-citizen pilots employed on the same position and flying the same plane.
12. In 1995 after commencing employment with the defendant, the plaintiff became a member of the NAPU. NAPU campaigned to have a same job for same pay applied to all pilots, citizen and non-citizen alike, and to do away with the dual pay system.
13. In 1996, a Department of Labour sanctioned Arbitration Tribunal awarded the citizen pilots a 25% increase in base salary plus other allowances, bringing the total citizen pilots’ salary up to 80% of the non-citizen’s base salary. Still, the citizen pilots’ base salary was 20% lower than the non-citizen pilots’ base salary. The defendant’s dual salary system continued to apply up until 2007. In 2007, the plaintiff was then President of NAPU.
14. On 12th October 2007, as President of NAPU, the plaintiff signed the 2007 Agreement between NAPU and the defendant. Still, the 2007 Agreement reflected the defendant’s dual salary system. As a result of the inequality because of the dual salary system, the citizen pilots started leaving the employ of the defendant and then there were mass exodus of citizen pilots. Some notable citizen pilots who left the defendant at that time included:
(a) Captain Granger Narara now with Etihad Airways, captain of Airbus A380.
(b) Captain Timothy Narara who left and had joined Emirates Airways, captain of Airbus A380.
(c) Captain Locklyn Sabumei now with Emirates Airways, captain of Airbus A380.
(d) Captain James Makop was with Emirates Airways and now in China, captain of Airbus A320.
(e) Captain Hens Pederson now with Emirates Airways, captain of Boeing 777.
(f) Captain Peter Ansphill (late) was with Thai Airways, captain of Boeing 767.
(g) Captain Ted Pakii now with Thai Airways, captain of Boeing 767.
(h) Captain Sam Siaguru now with Jade Cargo-China, captain of Boeing 747.
15. The plaintiff also applied out to other airline companies to leave the defendant. On 9th May 2008 Airline PNG offered to employ the plaintiff at a base salary which was twice what the defendant was offering him at that time. After receiving Airlines PNG offer, the plaintiff met with the then Chief Executive Officer (“CEO”) of the defendant Mr Wasantha Kumarasiri, to discuss his departure.
16. At the meeting, the plaintiff showed to the then CEO Mr Kumarasiri the letter of offer from Airlines PNG. The first question Mr Kumarasiri asked was “what can I do to keep you?” The plaintiff responded saying “Pay us the same as the expatriates for the same job done.” Mr Kumarasiri responded in kind saying, “Done. You as the President of NAPU, tell all your pilots NOT to leave.”
17. On the basis of Mr Kumarasiri’s representation for “same pay for same job” to apply for citizen pilots, the plaintiff did not take up the offer of Airlines PNG. Within weeks, the first draft of the 2008 Agreement capturing the “same pay same job” policy was sent to the plaintiff as President of NAPU by the defendant with directions for negotiations to commence forthwith and completed by or before 30th June 2008.
18. In summary the Court further finds that:
(a) the defendant introduced a “Same Job Same Pay” structure for citizen and non-citizen pilots working for it. This was intended to stop exodus of citizen pilots from its employ. During negotiations and drawing up of contracts for the plaintiff and other citizen pilots, the Mr Kumarasiri directed that the employer’s mandatory superannuation contribution of 8.4% be included in the salary of the plaintiff and other citizen pilots. The reason was, this is to avoid citizen pilots earning 8.4% more than the non-citizen pilots because non-citizen pilots are not entitled to employer’s portion of superannuation contribution.
(b) in his capacity as President of NAPU and on behalf of NAPU the plaintiff and the defendant entered into the 2008 Agreement for the “Same Job Same Pay” structure for the citizen and non-citizen pilots of the defendant.
(c) upon the expiry of the 2008 Agreement, in 2012, the Agreement was extended. The agreement was titled “Air Niugini Pilots (Non-Cadets Pilots) Agreement 2012, referred to herein as the 2012 Agreement.
(d) upon the expiry of the 2012 Agreement, he and the defendant entered into a Contract of Employment titled “Air Niugini Pilots Contract 2015” referred to herein as 2015 Contract.
(e) he was terminated from his employment by the defendant on 15th September 2016.
(f) it was a term of the 2008 Agreement, the 2012 Agreement and the 2015 Contract that he and other citizen air pilots’ salary included 8.4% superannuation contribution to the National Superannuation Fund Limited (“NasFund”) from the defendant as their employer.
(i) Clause 7.7 of the 2008 Agreement states:
“The Employer and Employee contribution towards NasFund shall be consistent with the Superannuation Act, Salary package stated in appendix A is deemed inclusive of the Employer’s contribution to the Superannuation, rates applicable and varied from time to time by the Superannuation Act.”
(ii) Clause 7.8 of the 2012 Agreement states:
“The Employer and Employee contribution towards NasFund shall be consistent with the Superannuation Act, Salary package stated in appendix A is deemed inclusive of the Employer’s contribution to the Superannuation, rates applicable from time to time.”
(iii) Clause 4.10 of the 2015 Contract states:
“The Employer and Employee contribution towards NasFund shall be consistent with the Superannuation Act, Salary package stated
in appendix A is deemed inclusive of the Employer’s contribution to the Superannuation, rates applicable and varied from time
to time by the Superannuation Act. This only applicable to Citizen pilots.”
19. Even after the signing of the respective Agreements and Contract, the issue of employer’s contribution to superannuation
remained a contentious point. At one stage, it was raised with NasFund. In a letter to Captain Allan Vele dated 24th December 2014 the Manager-Legal of the NasFund Ms Doris Gedare informed that:
“........ Section 76(2), the employer’s contribution must be paid out of its own property or assets.
In this instance, the employer’s portion of contribution which is 8.4% is reflected as part of your salary package and your total salary package is increased by this amount.
This is contrary to the provisions of the Act and can be corrected as follows:
(i) Removing reference to the 8.4% employer portion from your contract and reducing the total remuneration by that amount; or
(ii) Removing reference to the 8.4% employer portion from your contract and retaining the total remuneration. The obligation to pay the 8.4% is vested in the employer.”
20. It was thought the issue was then resolved because in November 2017 the defendant met with representatives from the Bank of Papua New Guinea (“BPNG”) Mr Ellison Pidik and NasFund Mr Charlie Gilichibi to clarify it. Subsequently, in an email dated 30th November 2017 copied to NasFund, the Assistant Governor of BPNG confirmed that the defendant complied with the requirements of the Superannuation Act in respect of its employment Agreements.
Liability
21. The disagreement is in relation to payment of 8.4% contribution to NasFund. In his two affidavits, Captain Taufa explained that the 8.4% contribution was factored into the plaintiff's salary such that it brings the plaintiff’s total salary on par with non-citizen pilots. This is because non-citizen pilots are not entitled to superannuation contributions. According to Captain Taufa, the plaintiff was paid 8.4% contribution on a fortnight basis during his employment and the defendant does not owe him any money.
22. The defendant reinforced this position in submissions at paragraphs 21 – 24 of its written submissions that:
“21. The true position is that the plaintiff and other National pilots agreed with the company that their total package would be calculated to equate with the total package enjoyed by expatriate pilots.
23. Further, the defendant submits that the plaintiff’s claim that he was unable to seek legal advice and that the defendant did not give him the opportunity to seek legal advice is false and be rejected because the negotiations between the parties went on for months. Furthermore, the defendant submits that the plaintiff provided no tenable explanation why it took him 2008 to 2018 to make this claim. In colloquial terms, it is a “try-on” because no-one else has made such a claim.
24. Finally, the defendant made strong submissions that the action must be dismissed because there is a contract between the parties and the Court must enforced against the plaintiff. The Court was urged to bear in mind that the context in which an agreement is reached, and the surrounding circumstances, are admissible and relevant to the interpretation of an agreement. For this, it refers to the cases of Misima Mines Ltd v. Collector of Customs (2007) N3206 at [66] and Codeifa Construction Pty Ltd v. State Rail Authority (1980-81) 149 CLR at 352.
25. The defendant’s articulation of these principles is uncontested. As the House of Lords (per Lord Wilberforce) said in Reardon Smith Line Ltd v. Yngvar Hansen-Tangen [1976] 1 WLR 989 at 997 when construing a contract, the Court must “place itself in thought in the same factual matrix as that in which the parties were” when the contract was made. According to the defendant, the interpretation argued by the plaintiff leads to an absurd and uncommercial result, contrary to the parties’ intention. Instead of arriving at parity, the citizen pilots would receive 8.4% per annum more in their salary package than the non-citizen pilots.
Philosophy of Equal Pay Policy
26. For the defendant to strongly submit that the plaintiff is engaged in “double-dipping” and bringing a claim as a “try-on” basis because no-one else has made such a claim is not only misconceived, but also fails to recognise the capability of citizen pilots to fly planes for the defendant. This observation is reinforced by the finding of the Court above that there was a mass exodus of citizen pilots in 2007 where the Narara brothers Captains Granger and Timothy, Captain Sabumei, Captain Makop, Captain Pederson, Captain Ansphill, Captain Pakii and Captain Siaguru left the employ of the defendant to work for world re-known airline companies in Etihad Airways, Emirates Airways and Thai Airways.
27. The departure of these citizen pilots and their engagement by these world re-known airlines reinforces the importance and recognition of citizen pilots’ competence, intelligence and experience to fly planes at that level. These were the plaintiff’s reasons for advocating for an equal pay policy for citizen pilots and non-citizen pilots. The 2008 Agreement for equal pay for citizen pilots and non-citizen pilots was the culmination of the plaintiff’s vision, leadership, and quest for recognition of citizen pilots. It was a milestone achievement for the plaintiff and citizen pilots since Independence. Significantly, as travel in pre-and-post Independence Papua New Guinea is predominantly by air, the equal pay policy is a recognition of citizen pilots’ contribution to aviation in Papua New Guinea and moreover, an incentive to attract more citizen pilots to join the defendant as the premier airline in the country to meet the growing demand in air travel.
28. Consequently, it is not always the case that it is necessary to construe a contract in its context like in this case, the 2008 Agreement, the 2012 Agreement and the 2015 Contract to appreciate how and why it was reached that the employer’s contribution to superannuation is to be paid in the way it has been but the Court must also ensure that the agreements must be compliant of the statutory laws, in this case, the Superannuation Act.
Payment of Employer’s Contribution to Superannuation
29. As found above, the 2008 Agreement included the following terms:
(a) the term of employment was three years commencing on 1st January 2012 or until amended or superseded by mutual agreement between the parties,
(b) the defendant shall pay the plaintiff by way of remuneration for his services the annual salary specified in Appendix A, and for the purpose of pay calculation the level is determined by the clauses in the Agreement,
(c) the method of payment at the plaintiff’s remuneration shall include:
- (i) payment fortnightly at the annual rate shown in Appendix A as a total package inclusive of inter-alia long service leave, employer’s contribution to the superannuation fund,
- (ii) fortnightly salary based on the net of the above deduction shall be converted into Kina (PGK) at then notes sell rate published by the defendant’s bank on the Wednesday immediately prior to the payday,
- (iii) any other deductions such as inter-alia superannuation shall be made from this calculation. Tax will then be deducted in accordance with the taxation law of PNG.
(d) for NasFund, the defendant and plaintiff contribution towards NasFund shall be consistent with the Superannuation Act. Salary package stated in the Appendix A is deemed inclusive of the defendant’s contribution to the superannuation, rate applicable and varied from time to time by the Superannuation Act.
30. The defendant submits that the 2008 Agreement, especially when read in context, provides for a total package which includes his salary and the employer’s contributions to superannuation. That is exactly what was negotiated. The employer’s superannuation contributions are being deducted from his salary as the plaintiff claims.
31. The 2012 Agreement in writing dated 1st January 2012 made between the defendant and plaintiff was in similar terms. The 2012 Agreement included:
(a) the term of employment was three years commencing on 1st July
- ending on 30th June 2011,
(b) the defendant shall pay the plaintiff by way of remuneration for his services the annual salary specified in Appendix A, specifically, F100 Captain – The Contract Rates – AU$161,318 per annum,
(c) the method of payment at the plaintiff’s remuneration shall include:
- (i) payment fortnightly at the annual rate shown in Appendix A as a total package inclusive of inter-alia long service leave, employer’s contribution to the superannuation fund,
- (ii) fortnightly salary based on the net of the above deduction shall be converted into Kina (PGK) at the sell rate published by the defendant’s bank on the Friday immediately prior to the payday,
- (iii) any other deductions such as inter-alia superannuation shall be made from this calculation. Tax will then be deducted in accordance with the taxation law of PNG.
(d) for NasFund, the defendant and plaintiff contribution towards NasFund shall be consistent with the Superannuation Act. Salary package stated in the Appendix A is deemed inclusive of the defendant’s contribution to the superannuation, rate applicable and varied from time to time by the Superannuation Act.
32. Then under a further Agreement in writing dated 1st January 2015 made between the defendant and plaintiff, it was agreed that the defendant would employ the plaintiff and would serve the defendant as a B767 Captain Level 1 air pilot for consideration. The 2015 Agreement included:
(a) the term of employment was from 1st January 2015 to 30th March 2017 or until amended or superseded by a new contract,
(b) the defendant shall pay the plaintiff by way of remuneration for his services the annual salary specified in Appendix A as modified,
(c) the method of payment at the plaintiff’s remuneration shall include:
(i) payment fortnightly at the annual rate shown in Appendix A as a total package for B767 Captain of K581,138.00 gross inclusive of inter-alia long service leave, employer’s contribution to the superannuation fund,
(ii) salary shall be paid fortnightly in Papua New Guinea Kina (PGK) at the annual rate (shown in Appendix A) appropriate to the individual salary level modified by any additions from the Agreement plus any overtime payments, plus or minus any amount that is applicable in this Agreement.
(d) for NasFund, the defendant and plaintiff contribution towards NasFund shall be consistent with the Superannuation Act. Salary package stated in the Appendix A is deemed inclusive of the defendant’s contribution to the superannuation, rates applicable and varied from time to time by the Superannuation Act.
33. Based on the above outline, there is no question that parties agreed in each Agreement and Contract for superannuation contributions towards NasFund to be consistent with the Superannuation Act. However, the true and correct legal position in relation to the employer’s contributions to superannuation consistent with the Superannuation Act is what the plaintiff had been advocating all along. This opinion is based on the combined effect of Section 3(1), Section 76 and Section 82 of the Superannuation Act.
34. Section 76 of the Superannuation Act states:
“76. MINIMUM CONTRIBUTIONS BY EMPLOYER.
(1) An employer referred to in Section 4(1)(a) shall, in respect of each of its employees continuously employed for a period of three months or more, make a contribution to an ASF at the rate, and computed from the date, prescribed by regulation.
(2) The contribution under Subsection (1) by an employer to an ASF in respect of an employee shall be made out of the property of the employer.
(3) The employer’s liability to make a contribution under Subsection (1) is not affected by the basis on which the employee is paid (including daily, weekly, fortnightly or monthly).
(4) A provision in a contract of employment that allows an employer to make a contribution of less than the prescribed rate is void.
(5) An employer may make contributions in addition to the minimum rate prescribed.
(6) Regulations may prescribe a delay in the introduction of minimum contributions for non-citizens.
(7) An employer who fails to comply with this section is guilty of an offence.”
35. Unlike Mathias Goma & 703 Others v. Protect Security & Communication Limited (2013) SC1300 a decision by majority, the Supreme Court held that a breach of statutory duty to pay an employer’s contribution to an authorised
superannuation gives rise to a private right and cause of action and that this cause of action is distinct from negligence or breach
of contract, in this case, the plaintiff is suing for non-payment of 8.4% of the employer’s contribution to NasFund under two
sets of Agreements and a Contract. This is because the Agreements and Contract make provision for the payment of the employer’s
contribution to NasFund under clause 7.7, clause 7.8 and clause 4.10 respectively. However, this clause for payment of employer’s
contribution is no ordinary one but one that is mandatory by law under Section 76 of the Superannuation Act.
36. What this means is that an alleged failure or non-payment of employer’s contribution is not only a breach of the agreements and contract between the parties but also a breach of Section 76 of the Superannuation Act.
37. Section 76(2) provides for the contribution to be made out of the “property” of the employer. The key word is “property” and it is defined in Section 3(1) of the Superannuation Act as “any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description.” This is the criteria to determine the question whether the employer’s contribution must be included in the total salary package of the plaintiff. Applying the definition of the word “property” in Section 3(1) to Section 76(2), it means the employer’s contribution to superannuation must come out from the property of the employer, in this case, the defendant.
38. Moreover, the defendant’s payment of 8.4% employer’s contributions to superannuation is not subject to the pay parity policy consideration between the citizen pilots and non-citizen pilots. The pay parity policy consideration between the citizen pilots and non-citizen pilots is an immaterial consideration and the defendant’s reliance on it has led to a misconstruction of Section 3(1) and Section 76 of the Superannuation Act, and an absurd and unjust result.
39. It follows that the inclusion of the contribution in the total package of the plaintiff is contrary to what Section 76(2) states. It is also reinforced by Section 82 of the same Act which states:
“82. EMPLOYER NOT TO REDUCE WAGES ETC.
All employer shall not, by reason of its liability to pay mandatory contributions under this Act or its election to make voluntary
contributions, reduce, directly or indirectly, the wages salary or other remuneration or benefits to which an employee is entitled
under a contract of employment or any other law.”
40. The deduction of the employer’s contribution from the plaintiff’s total package is an indirect reduction of the plaintiff’s
total salary. As statutory laws, in this case, the Superannuation Act are ranked higher than the common law principles of contract law under Section 9 (The Law), Section 10(c) and (e) (Construction of Written Laws) and Schedule 2.2(1)(a) (Adoption of a Common Law) of the Constitution respectively, the Superannuation Act prevails over clause 7.7 of the 2008 Agreement, clause 7.8 of the 2012 Agreement and clause 4.10 of the 2015 Contract.
41. Consequently, these clauses are inconsistent with Section 76 and Section 86 of the Superannuation Act and must be struck down. It follows that they are declared null and void and of no effect. Conversely, the defendant must comply with its legal obligation imposed by Section 76 and Section 82 (supra) to remit its portion of superannuation to NasFund and as it has failed, it is liable for the non-payment of its portion to Nasfund.
Defence of Statutory Time-Bar
42. The defendant relies on Section 16 of the Frauds and Limitations Act, 1988 to submit that given that the plaintiff sues for breach of contract, a claim for non-payment of employer’s contribution under the 2008 Agreement is more than six years when the plaintiff issued this proceeding and is statute barred. However, a claim for mandatory superannuation contribution under Section 76 of the Superannuation Act is recoverable only after the employee ceases employment whether on retirement, resignation, termination or death.
43. In Anave Ona v. National Housing Corporation (2009) SC995, the Supreme Court held that the plaintiff can only claim superannuation contribution after he ceases employment with the defendant. The time limitation of six years will apply after the date of cessation of employment. In this case, the plaintiff ceased employment with the defendant on 15th September 2016. On 15th March 2018 the plaintiff issued this proceeding. This was one year and six months after he ceased employment with the defendant and was well within six years to issue proceeding. This defence is without merit and dismissed.
Defence of Inordinate Delay
44. As to the defence of inordinate delay, it is also without merit and dismissed for the same reason that a claim for superannuation benefits accrues after the date of an employee’s cessation of employment with the employer.
Misrepresentation
45. At common law there are three main types of misrepresentation. These are fraudulent misrepresentation, negligent misrepresentation and innocent misrepresentation. A misrepresentation is a false statement of a material fact made by one party which affect the other party’s decision in agreeing to a contract. It can be brought in respect of a misrepresentation of fact or law. An action in misrepresentation can be brought by the misled party.
46. In the present case, the allegation of misrepresentation arises from a contractual setting because the controversial issue of payment of employer’s contributions to superannuation formed part of the contract for equal pay structure for citizen pilots and non-citizen pilots. However, it is also a statutory benefit/entitlement due to the employee under Section 76 of the Superannuation Act.
47. Parties had been negotiating to reach a favourable pay structure for citizen pilots and reached an agreement to bring their salary to be on par with the salary of non-citizen pilots. While the intention was good and negotiations appeared to be done in good faith, the defendant misread the application of Section 76 and Section 82 of the Superannuation Act. Mr Kumarasiri as the CEO of the defendant ought and should have known that the defendant as the employer of the plaintiff had a legal obligation under Section 76 of the Superannuation Act to pay the employer’s contribution of superannuation to NasFund out of the defendant’s own property, in this case, funds.
48. However, he was overwhelmed by the false notion that because the non-citizen pilots were and do not pay superannuation to NasFund, paying employer’s contributions to superannuation by the defendant out of its own funds will be more than the salary of non-citizen pilots and contrary to the equal salary structure for citizen pilots and non-citizen pilots. This was the reason for Mr Kamarasiri to maintain the defendant’s position that it will not pay any more than what it will and has paid to the plaintiff including other citizen pilots its employer’s superannuation to NasFund in a total salary package for citizen pilots. This is a material fact made by Mr Kumarasiri which affected and indeed gave the plaintiff and other citizen pilots no other option but to accept and sign the respective Agreements and Contract.
49. Conversely, it is no defence to the defendant to rely on the contractual obligations under the Agreements and Contract to claim that the decision was for commercial reasons. This is because the position of Mr Kumarasiri and that of the defendant was clearly wrong and false. It contravened a statute law, namely Section 76 and Section 82 of the Superannuation Act. Moreover, the plaintiff’s claim for payment of employer’s contribution to superannuation should not come as a surprise to the defendant because according to the Court’s findings above, in a letter to Captain Allan Vele dated 24th December 2014 the Manager-Legal of the NasFund Ms Doris Gedare informed that:
“........ Section 76(2), the employer’s contribution must be paid out of its own property or assets.
In this instance, the employer’s portion of contribution which is 8.4% is reflected as part of your salary package and your total salary package is increased by this amount.
This is contrary to the provisions of the Act and can be corrected as follows:
(i) Removing reference to the 8.4% employer portion from your contract and reducing the total remuneration by that amount; or
(ii) Removing reference to the 8.4% employer portion from your contract and retaining the total remuneration. The obligation to pay the 8.4% is vested in the employer.”
50. Then ignoring the legal advice of Ms Gedare, in November 2017 the defendant met with representatives from BPNG and NasFund to clarify the situation. Subsequently, in an email copied to NasFund, the Assistant Governor of BPNG confirmed that the defendant complied with the requirements of the Superannuation Act in respect of its employment Agreements.
51. On the strength of the evidence, I am satisfied that the plaintiff has established that the defendant has falsely misrepresented to him the manner in which his salary will be structured and where the source of the employer’s contribution to superannuation will come from. Consequently, he was denied the employer’s portion of superannuation to NasFund. Liability is established against the defendant for false misrepresentation.
Fairness of Transaction
52. The plaintiff relies on a further allegation which was not pleaded in the statement of claim to reinforce his claim of misrepresentation. At paragraphs 59 and 60 of his written submissions, the plaintiff refers to Section 4 and Section 5 of the Fairness of Transaction Act 1993 and at paragraphs 88 and 89 of the same submissions, submits, amongst other things, that the transaction in relation to the agreement between the parties on an equal pay structure for citizen pilots and non-citizen pilots and in particular, the inclusion of employer’s contributions to superannuation in the plaintiff’s total salary package is unfair because the defendant was in a predominant position and the plaintiff had no choice but to accept the offer to include the employer’s contributions to superannuation in the his total salary package.
53. However, it is a cardinal rule of pleadings that a party must plead the allegation of fact it seeks to rely on at trial to put the defence on notice. In this case, the allegation will be disregarded because the plaintiff did not plead it in the statement of claim to put the defendant on notice that he will be also relying on it at trial to prove misrepresentation. It is so because an allegation of breach of Section 4 and Section 5 of the Fairness of Transaction Act 1993 may constitute a separate cause of action and/or allegation to contest the enforceability of a contract or a clause of a contract. Equally important is that as the plaintiff has established a case of breach of contract and also, misrepresentation, it is not necessary to consider it. It is disregarded.
Assessment of Damages
54. According to paragraph 19 of the statement of claim, the plaintiff seeks several declaratory orders, one of them being, for respective clauses of the 2008 Agreement, 2012 Agreement and 2015 Contract declared null and void, and payment of 8.4% as salary reimbursement in the total sum of K407,244.95, relevant cumulative interest declared and paid by NasFund to members from around July 2008 to around August 2017, and general damages, interests and legal costs.
Reimbursement of 8.4% as Salary
55. In terms of proof of plaintiff’s loss, the task of the Court is made easy because while the plaintiff seeks a sum of K407,244.95 (refer to paragraph 19.4 of the statement of claim) and refers to his payslip marked as annexure “K” to his affidavit (exhibit “P1”) to compute the monetary loss, annexure “C” to the affidavit of Captain Taufa (exhibit “D1”) which is the defendant’s “Chris21” Payroll System Spread Sheet of the defendant’s superannuation contribution for the plaintiff to NasFund refers to a total sum of K421,522.20. Irrespective of when it accrued or fell due, it is the defendant’s legal obligation to remit its contribution to NasFund from the date when the plaintiff commenced employment. For this reason, the Court is satisfied that the sum due and owing to the plaintiff is K421,525.20. This sum is awarded.
General Damages for Misrepresentation
56. General damages may be awarded in an action for misrepresentation. The onus is on a party to plead and seek an award of general damages for misrepresentation. In this case, the plaintiff makes no claim for general damages for misrepresentation in terms of submissions and the Court has received no submissions to decide an appropriate award of damages. If he had asked, an award of damages will be granted. However, he is content with the relief he seeks, it being one and same order for payment of employer’s contributions to superannuation in this cause of action. It follows no award of damages for misrepresentation will be ordered.
General Damages for Frustration and Hardship
57. Similarly, general damages may be awarded in an action for breach of contract if general damages have been sought for frustration and hardship: see Brian Hodson v. The State [1985] PNGLR 303 and Harding v. Teperoi Timbers Pty Ltd [1988-89] PNGLR 128. The onus is on a party to plead and seek an award of general damages for frustration and hardship. In this case, the plaintiff makes no claim for general damages for frustration and hardship in terms of submissions and the Court has received no submissions to decide an appropriate award of damages. If he had asked, an award of damages will be granted. It follows no award of damages for frustration and hardship will be ordered.
Payment of Cumulative Interest Declared and Paid by NasFund
58. Finally, the plaintiff seeks cumulative interest declared and paid by NasFund on the employer’s contributions from around July 2008 to around August 2017. The order sought is refused because the interest component is a matter for NasFund to award and NasFund is not a party to this litigation and has not been heard on this matter. Also, it is a matter which the plaintiff is at liberty to raise or take up with NasFund at his pleasure.
Order
59. The final terms of the order of the Court are:
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Holingu Lawyers: Lawyers for Plaintiff
Ashurst Lawyers: Lawyers for Defendant
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