Bank South Pacific Limited v Gibson Nad (2010) SC1278

• Jurisdiction: Papua New Guinea
• Judge: Mogish, Gabi & Yagi JJ
• Judgment Date: 14 May 2010
• Citation: (2010) SC1278
• Docket Number: SCA NO. 41 OF 2008
• Court: Supreme Court
• Year: 2010
• Judgement Number: SC1278

Full Title: SCA NO. 41 OF 2008; Bank South Pacific Limited v Gibson Nad (2010) SC1278

Supreme Court: Mogish, Gabi & Yagi JJ

Judgment Delivered: 14 May 2010

SC1278

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 41 OF 2008

BETWEEN:

BANK SOUTH PACIFIC LIMITED

Appellant

AND:

GIBSON NAD

Respondent

Waigani: Mogish, Gabi & Yagi JJ

2009: 26th October &

2010: 14th May

SUPREME COURT APPEAL – Civil appeal – breach of employment agreement – procedural irregularity – right to be heard – failure to accord an opportunity to be heard on oral submissions at trial – substantial miscarriage of justice – judgment quashed – award of damages set aside – re-trial ordered.

Facts:

The respondent was employed by the appellant under an employment agreement for a period of 3 years. The appellant terminated the agreement approximately 11 months before the expiry of the agreement. The termination was due to restructure, which rendered the position held by the respondent redundant. The respondent sued the appellant alleging unlawful termination and claimed damages.

The trial judge heard the evidence and adjourned to a date for the purpose of the parties preparing written submissions and to present both their written and oral submissions.

On the date appointed there was no formal hearing conducted. The associate to the trial judge simply collected the written submissions from the lawyers representing the parties and delivered them to the trial judge in chambers. The trial judge did not hear oral submissions from the parties.

The trial judge found the appellant liable and awarded damages to the respondent for the unexpired portion of the employment agreement, redundancy entitlement and loss of property, totaling K301,629.00.

The appellant appeals against the finding of liability and award of damages.

Held:

(1) The failure by the trial judge to afford opportunity to the parties to make oral submissions amounts to a fundamental procedural irregularity resulting in a denial of a right to be heard.

(2) The whole of the judgment of the National Court made on 2nd of May 2008 is quashed and the award in damages be set aside.

(3) The matter be remitted back to the National Court to be tried before another judge.

(4) The respondent pay the appellant's costs in the appeal to be taxed, if not agreed.

Cases Cited:

Jimmy Mostata Maladina v. Posain Polok (2004) N2568

Kumagai Gumi Co. Ltd v National Provident Fund Board of Trustees (2006) SC 837

Charles Bougapa Ombusu v The State (No. 1)[1996]PNGLR 335 SC496

Air Niugini and National Airline Commission v Denis Salter (2001) SC 679

Curtain Brothers (Queensland) Pty Ltd & Another v The State [1993] PNGLR 285

Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694

Pacific Foam Pty Ltd v Zurich Pacific Insurance Ltd (1998) N1745

Pama Anio v Aho Baliki (2004) N2719

Charles Bongapa Ombusu v The State (No. 2) [1997] PNGLR 699

Gibson Gunure Ohizave v The State (1998) SC 595

Fred Bukoya v The State (2007) SC 887

Counsel:

R. Bradshaw, for the Appellant

G. Konjib, for the Respondent

14th May, 2010

DECISION

1. BY THE COURT: The appellant appeals against a judgment of the National Court delivered on 2nd of May 2008 where the Court found the appellant liable for wrongful termination of a contract of employment it had with the respondent and consequently awarded damages in favour of the respondent.

2. The facts of the cases are that; the respondent commenced employment with the appellant in February 1980 as a payroll clerk. At that time the appellant was trading as Papua New Guinea Banking Corporation Ltd (PNGBC Ltd). In or about 1998 or 1999 the PNGBC Ltd amalgamated or merged with Finance Pacific Ltd. In or about 2001 the merger was dissolved and PNGBC Ltd separated from Finance Pacific Ltd and operated as an independent entity.

3. Over time, the respondent was progressively promoted to various higher positions within the organization. Under the employment agreement, the appellant was employed as Relationship Manager.

4. The respondent claims that in 1997 the PNGBC Ltd and the PNGBC Staff Association entered into an industrial agreement. This agreement is in dispute. The appellant says that such agreement never existed and maintains that the only agreement that existed was the agreement made in 1994.

5. The respondent was initially employed by Pacific Finance Ltd. He was employed under a written agreement made on 20th of January 2000. The agreement was for a period of 3 years commencing on 3rd of January 2000. The agreement continued even after the dissolution of Pacific Finance Ltd and subsequent take-over by the appellant in 2001. The appellant appeared to have accepted and honoured the terms of the agreement.

6. On 11th of February 2002 the appellant terminated the employment agreement with the respondent.

7. The termination was made by a letter of the same date. The letter of termination cited clauses 8 and 9 of the employment agreement as the basis for the termination.

8. Upon terminating the agreement, the appellant paid the respondent 3 months salary and other benefits as severance entitlements, which it says the respondent was entitled to under the terms of the agreement.

9. The appellant's reason for terminating the agreement was that it was undertaking a strategic path within it's lending division aimed at improving, amongst others, its customer service standards and consequently it decided that the respondent’s position was no longer required. In other words, due to restructure undertaken by the appellant, the position held by the respondent was abolished or made redundant.

10. The respondent claimed that the position he held was a critical and necessary function or position and the abolishment of the position was unmeritorious and therefore the termination was without any lawful or justifiable cause in breach of the employment agreement. In the alternative, he claims that if the abolishment of his position was proper in the circumstances; his removal or termination should be implemented in accordance with the terms stipulated in the Redundancy, Redeployment and Retrenchment Agreement 1997.

11. The respondent apparently disputed the action by the appellant and sued for unlawful termination of the agreement and damages.

12. He claims damages pursuant to the Redundancy, Redeployment and Retrenchment Agreement 1997.

Grounds of Appeal

13. There are nine grounds raised by the appellant in the appeal. However, most of the grounds are similar, if not, substantially the same. We therefore summarize the grounds into three broad categories for consideration-

(a) the appellant was denied the right to be heard.

(b) the trial judge erred in not properly interpreting and applying the terms of the employment agreement.

(c) the trial judge erred in relying on an invalid and non binding agreement in awarding damages.

Right to be heard

14. The appellant argues that the trial judge did not give the parties the right to be heard in respect to the presentation of oral submission and consequently it was denied a right to be heard. It relied on Jimmy Mostata Maladina v. Posain Poloh (2004) N2568 and Kumagai Gumi Co. Ltd v National Provident Fund Board of Trustees (2006) SC 837. These cases laid down the principle that litigants have a fundamental right to address the Court or be heard on any matter including submissions before a decision is made.

15. Clearly, this principle finds its origin in s. 59 of the Constitution which states:

"59. Principles of natural justice.

(1) Subject to this Constitution and to any statute, the principles of natural justice are the rules of the underlying law known by that name developed for control of judicial and administrative proceedings.

(2) The minimum requirement of natural justice is the duty to act fairly and, in principle, to be seen to act fairly."

16. The facts in Jimmy Mostata Maladina case (supra) are very similar to the present case. In that case a direction was issued by a Committal Magistrate for the prosecution and the defence to prepare and file written submissions and the matter was adjourned to a date to be fixed for the hearing of the submissions by another Committal Magistrate. Both the prosecution and the defence complied with the direction and filed their respective written submissions. When the matter returned before the Court for the hearing of submissions, the Committal Magistrate proceeded to pronounce his decision to commit the defendant to stand trial in the National Court without affording an opportunity to the parties to be heard on their written submissions.

17. After reviewing many past cases dealing with the rule or practice of parties filing written submission, the Court said:

"One thing about written submissions is clear – written submissions are not intended and should never replace, or be a substitute for oral submissions or hearing. Unless the parties with leave of the Court, expressly waive their right to be heard orally and agree to proceed by way of written submissions only, they should not be precluded, directly or indirectly, by the Court...