Gladys Evelyn Kumar, Michael Ray Manning and Joe Rokpa v Peter Wama, Paul Excell and Engineering Management Pty Ltd

• Jurisdiction: Papua New Guinea
• Judge: Woods J
• Judgment Date: 16 July 1993
• Citation: [1993] PNGLR 38
• Court: National Court
• Year: 1993
• Judgement Number: N1162

National Court: Woods J

Judgment Delivered: 16 July 1993

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

GLADYS EVELYN KUMAR,

MICHAEL RAY MANNING

AND JOE ROKPA

V

PETER WAMA,

PAUL EXCELL AND

ENGINEERING MANAGEMENT PTY LTD

Mount Hagen

Woods J

7-8 June 1993

16 July 1993

CONSTITUTIONAL LAW — Suspension of provincial government — Role of Administrator — Provincial government company — Administrator is not beneficiary of the company but merely public servant delegate of the Minister — Administrator has no power to appoint trustees and transfer shares.

COMPANY LAW — Incorporation — Separate legal person — Corporate personality.

EMPLOYMENT — Contract of — Wrongful termination — Damages.

DAMAGES — Wrongful termination — Frustration, distress, and disappointment.

Facts

The third defendant company was established by the Western Highlands Provincial Government to carry on, undertake, etc., the management and administration of the Engineering Division of the Provincial Government. The two issued shares of the company were held by two employees, one of whom included the third plaintiff, who became a director and Chairman of the Board of Directors of the company. The Western Highlands Provincial Government was suspended, and the first defendant was appointed Administrator of the province. He purported to remove the two shareholders, designate himself and another as shareholders of the company, and remove the directors, secretary, and other officers of the company. These included the first and second plaintiffs. In an action for wrongful dismissal, the Court held:

Held

1. The directors held the shares in trust for the Provincial Government.

2. The company is a separate legal person and the beneficial ownership of the shares vested in the State as successor to the Provincial Government. The State acts through the Head of State, acting on advice, or by the Minister so authorized.

3. The administrator, not succeeding to the beneficial interests of the shares, could not appoint trustees and terminate staff, and any such termination was invalid and, therefore, wrongful.

4. As, in fact, the services of the first and second plaintiffs as employees of the company had ceased through the wrongful act of the Administrator, reinstatement was inappropriate. The better remedy was an order for damages for their wrongful termination.

5. The measurement of damages is with reference to the period of notice to validly terminate their service, i.e. three months.

6. The general rule is that damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by the breach or unless the contract is one the object of which is to provide enjoyment, relaxation or freedom from molestation.

Cases Cited

Baltic Shipping Co v Dillon (1993) 67 ALJ 228.

Fink v Fink (1946) 74 CLR 127.

Hamlin v Great Northern Railway Co (1856) 1 H & N 408; 156 ER 1261.

Counsel

P Kopunye for the plaintiff.

I Molloy and P Waine for the defendants.

16 July 1993

WOODS J: This is a claim for damages for wrongful termination by the first and second plaintiffs as employees of the Engineering Management Pty Ltd and for a declaration that the third plaintiff still holds the chairmanship of the Engineering Management Pty Ltd.

Engineering Management Pty Ltd was set up by the Western Highlands Provincial Government to manage certain aspects of the responsibilities of and work of the Provincial Government.

According to the Memorandum of Association of the company, Article 3 i, it was established to establish and carry on, undertake, take part or engage in the management and administration of the Engineering Division of the Western Highlands Provincial Government. The subscribers to the company were William Konjibi and Patrick Bang, who each subscribed for one share. There is no documentation explaining in what capacity they were the shareholders of the company. However, it appears to have been understood that they were holding the shares in trust for the Western Highlands Provincial Government. A search of the company's file at the Companies Office in February 1993 showed that there were two shares issued and paid up in the company and that these two shares were in the names of Joseph Rokpa, the third plaintiff, and Patrick Bang. The search suggested the shares were held in trust for the Provincial Government. Mr Ropka gave evidence that he was the Secretary to the Western Highlands Cabinet prior to the suspenson of the Provincial Government, that he was appointed to be a shareholder with Mr Bang by the Cabinet, and he, thus, became a director and Chairman of the Board of the company. On 18 December 1992, the Western Highlands Provincial Government was suspended, and on 21 December 1992, Peter Wama was appointed Administrator.

On 21 December 1992, Peter Wama in his capacity as Administrator removed the two above shareholders of Engineering Management Pty Ltd and caused himself and a John Tembon to be appointed the shareholders of the company. As Administrator, he deemed himself to be the sole beneficial shareholder of the company and, thereupon, caused the directors, secretary and other officers of the company to be removed and replaced. Thus he took steps to first suspend and then terminate the first plaintiff and to terminate the second plaintiff. He then appointed the second defendant as the manager of the company, he having previously been the manager before his termination earlier.

However, I am unable to find under what legal authority or power Mr Wama was able to act as he did to transfer the two shares in the company and, in effect, take over the legal control and management of the company.

Mr Wama's appointment and position as Administrator is not directly covered in any legislation, but rather is under the powers of the National Executive Council, as set out in the Organic Law on Provincial Government s 98 (1), to ...