John Murua v Ramu Nico Management (MCC) Limited (2013) N5092

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 04 March 2013
• Court: National Court
• Citation: (2013) N5092
• Docket Number: WS No 1499 of 2009
• Year: 2013
• Judgement Number: N5092

Full Title: WS No 1499 of 2009; John Murua v Ramu Nico Management (MCC) Limited (2013) N5092

National Court: Cannings J

Judgment Delivered: 4 March 2013

N5092

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1499 OF 2009

JOHN MURUA

Plaintiff

V

RAMU NICO MANAGEMENT (MCC) LIMITED

Defendant

Madang: Cannings J

2013: 22 February, 4 March

LAW OF EMPLOYMENT – wrongful dismissal – oral contract – whether contract lawfully terminated for cause; Employment Act, Section 36 (grounds for termination of contract) – whether employee paid proper amount of salary in lieu of notice; Employment Act, Section 35 (termination of contract without notice).

DAMAGES – approach to assessment of damages for wrongful dismissal – whether amount of damages restricted to salary that would have been earned in notice period.

The defendant terminated the plaintiff’s employment on the grounds of failure to perform to standards required and violation of the defendant’s rules and regulations. The plaintiff sued the defendant, claiming damages for wrongful dismissal, and argued that the defendant failed to (1) give him three warnings; (2) give proper notice of its intention to terminate his employment; (3) use proper grounds for termination; and (4) give him a fair hearing. The defendant denied liability and argued that even if it was liable for wrongful dismissal the damages to which the plaintiff was entitled were restricted by the amount of salary that would have accrued to the plaintiff during the period of notice required under Section 34(4) of the Employment Act, which was one day. A trial was conducted on both liability and damages.

Held:

(1) The contract between the plaintiff and the defendant was an oral contract of service and there was no term of that contract requiring the defendant to give three warnings to the plaintiff before terminating his employment. The first alleged breach of contract was not sustained.

(2) The defendant was entitled to terminate the contract without notice irrespective of whether (a) there were good grounds under Section 36(1) of the Employment Act for termination without notice or payment instead of notice or (b) the contract was terminated under Section 34 of the Employment Act, in which case there is an obligation to pay the employee a sum equal to the amount of salary that would have accrued to the employee during the period of the notice”. The second alleged breach of contract was not sustained.

(3) As the plaintiff was arguing that the defendant improperly terminated the contract for cause he had to prove that none of the grounds of termination fell within the grounds prescribed by Section 36(1) of the Employment Act as being circumstances in which an employer can terminate a contract of employment without notice and without salary instead of notice. The plaintiff proved that none of those grounds applied. Therefore the defendant was obliged to pay salary instead of notice which, in this case, pursuant to Section 34(4)(c) of the Employment Act, was two weeks. The defendant’s argument, based on Section 17 of the Employment Act, that the period was one day was rejected. As the defendant paid only one week’s salary, the third alleged breach of contract was sustained.

(4) Unless the terms of a contract of employment make provision to the contrary, an employer is not obliged to afford an employee a fair hearing prior to termination of employment. The fourth alleged breach of contract was not sustained.

(5) As one allegation of breach of contract was sustained and it pertained to termination of the contract of employment, the defendant was liable for wrongful dismissal and the plaintiff was entitled to damages.

(6) There is no binding principle of law that in assessing damages the National Court is obliged to award nothing more than the amount of salary that would have been paid to the employee during the notice period. Here, it was appropriate to award the sum of K1,803.00 general damages comprising the underpayment of one week’s salary (K601.00) plus damages for distress, frustration and inconvenience associated with unlawful termination of employment, calculated by reference to two weeks’ salary (K1,202.00), the total damages being K1,803.00.

(7) In addition the plaintiff was awarded interest of K673.60, making the total judgment sum K2,476.60. The parties were ordered to pay their own costs due to the excessive nature of the claim set out in the statement of claim, the fact that the plaintiff did not succeed on all issues and the inconvenience caused the defendant and the court by the plaintiff’s lawyers' lack of diligence in prosecuting the proceedings.

Cases cited

The following cases are cited in the judgment:

Chemica Didiman v Bernard Tiau (2007) N5000

Frederick Mathies v Joel Korina (2009) N3832

Harding v Teperoi Timbers Pty Ltd [1988] PNGLR 128

Livingston v Raywards Coal Co [1880] 5 App Cases 25

New Britain Palm Oil Ltd v Vitus Sukuramu (2008) SC946

Porgera Joint Venture Manager Placer (PNG) Ltd v Robin Kami (2010) SC1060

UPNG v Jerry Duwaino (2009) N3723

William Maninga v Ramu Sugar Ltd (2010) N4118

TRIAL

This was a trial of a wrongful dismissal action that addressed questions of both liability and damages.

Counsel

J Murua, the plaintiff, in person

C Posman, for the defendant

4th March, 2013

1. CANNINGS J: The plaintiff, John Murua, is seeking damages for wrongful dismissal against the defendant, his former employer Ramu Nico Management (MCC) Limited. The plaintiff commenced employment under an oral contract of employment on 18 November 2006. He was a truck driver. His employment was terminated without notice on 4 July 2008 on the grounds of failure to perform to standards required and violation of the defendant’s rules and regulations. He was paid one week’s salary instead of notice. The defendant denied liability and argued that even if it was liable for wrongful dismissal the damages to which the plaintiff was entitled were restricted by the amount of salary that would have accrued to the plaintiff during the period of notice required under Section 34(4) of the Employment Act, which was one day. A trial has been held on the questions of both liability and damages.

LIABILITY

2. The plaintiff argues that he was wrongfully dismissed, ie that the defendant breached the contract of employment, in four respects, by failing to:

1 give him three warnings;

2 give proper notice of its intention to terminate his employment;

3 use proper grounds for termination; and

4 give him a fair hearing.

1 Failure to give three warnings

3. The plaintiff’s argument is without merit. The contract of employment was an “oral contract of service” for the purposes of Division III.3 of the Employment Act 1978 and there was no term of that contract requiring the defendant to give three warnings to the plaintiff before terminating his employment. The first alleged breach of contract is not sustained.

2 Failure to give proper notice of intention to terminate

4. As this was an oral contract the defendant was entitled to terminate it without notice, and this could be done in two ways. First, under Section 36(1) (ground for termination of contract) of the Employment Act, which is often called ‘termination for cause’ as it conveys the notion that the employee has done something wrong that warrants instant dismissal. Section 36(1) states:

An employer may terminate a contract of service without notice or payment instead of notice—

(a) where the employee—

(i) wilfully disobeys a lawful and reasonable order; or

(ii) misconducts himself by an act of omission or commission that is inconsistent with the due and faithful discharge of his duties; or

(iii) is guilty of a fraud or dishonesty; or

(iv) is habitually neglectful of his duties; or

(v) is imprisoned for a period exceeding seven days; or

(vi) is continually absent from his employment without leave or reasonable excuse; or

(vii) is convicted of an offence or contravention of this Act or any other law relating to employment; or

(b) on any other ground on which he would be entitled to terminate the contract without notice at common law.

5. The second way that termination without notice can be lawfully effected is under Section 35(2) (termination of contract without notice) of the Employment Act, which states:

Where a party to a contract has given notice of intention to terminate under Section 34, either party may, without waiting for the expiry of that notice, terminate the contract by paying to the other party a sum equal to the amount of salary that would have accrued to the employee during the period of the notice.

6. Periods of notice are set out in Section 34(4) (notice of termination), which states:

Where there is no provision in a contract of service for notice of intention to terminate, the length of the notice shall be not less than—

(a) one day's notice if the employee has been employed for less than four weeks; or

(b) one week's notice if the employee has been employed...