National Airline Commission, trading as Air Niugini v Valerian Lysenko [1986] PNGLR 323

• Jurisdiction: Papua New Guinea
• Judge: Wilson J:
• Judgment Date: 05 December 1986
• Court: Supreme Court
• Citation: [1986] PNGLR 323
• Year: 1986
• Judgement Number: SC325

Full Title: National Airline Commission, trading as Air Niugini v Valerian Lysenko [1986] PNGLR 323

Supreme Court: Bredmeyer J, Cory J, Wilson J

Judgment Delivered: 5 December 1986

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

NATIONAL AIRLINE COMMISSION TRADING AS AIR NIUGINI

V

VALERIAN LYSENKO

Waigani

Bredmeyer Cory Wilson JJ

30 October 1986

5 December 1986

MASTER AND SERVANT — Contract of employment — Construction and effect — Termination of services — No reason given or required — Redundancy clause — Redundancy pay dependent on objective facts at date of dismissal.

MASTER AND SERVANT — Contract of employment — Construction and effect — Termination of services — Dismissal for proven misconduct — Proof of misconduct required.

The contract of employment of a pilot with Air Niugini provided (cl 3) that a person with the pilot's length of service could be dismissed by one month's notice in writing or one month's salary in lieu of notice. The clause also provided that nothing in it derogated from the employer's right at common law to dismiss a pilot without notice for "proven misconduct or other proven sufficient cause". Clause 12 provided that where a person is dismissed for redundancy he is entitled to a redundancy payment based on a formula involving the person's level of pay and years of service.

A senior pilot with eleven and a half years service was given one month's pay in lieu of notice and sued to recover redundancy pay. The trial Judge found that there was a redundancy situation at the time of the dismissal, but that the main reason why the pilot was singled out for dismissal was that management considered him guilty of misconduct. On appeal from an award of redundancy pay plus interest,

Held

On a proper construction of the contract:

(1) The pilot could only be dismissed for misconduct or other sufficient cause where there was proof thereof.

(2) Management's belief in misconduct did not satisfy the requirement of proof.

(3) Accordingly, the pilot was to be treated as having been dismissed for no stated reason under cl 3.

(4) The entitlement to redundancy pay under cl 12 was dependent on the objective fact of redundancy at the date of dismissal.

(5) There being a redundancy situation at the time of dismissal the pilot was entitled to redundancy pay.

Appeal

This was an appeal from a decision of Barnett J in which he awarded a pilot dismissed by the appellant, redundancy pay plus interest.

Counsel

M Holmes, for the appellant.

I Molloy and R Thompson, for the respondent.

Cur adv vult

5 December 1986

BREDMEYER J: This is an appeal against a decision of Barnett J awarding K77,403.51 redundancy pay plus interest to the respondent. The respondent was a pilot employed by Air Niugini whose services were terminated in March 1985. The appellant appeals as of right on the trial Judge's finding of estoppel in pais against the appellant. The appellant seeks leave to appeal on findings of fact that the respondent was terminated as redundant. The respondent in turn has filed a notice under O 7, r 28 of the Supreme Court Rules claiming that the trial Judge should have found that the plaintiff was dismissed for redundancy notwithstanding the finding that this was not the main reason for termination.

Clause 3 of the plaintiff's contract with Air Niugini provided that a person with the plaintiff's length of service could be dismissed by one month's notice in writing or one month's salary in lieu of notice. By implication no reason need be given for such dismissal. The clause also provided that nothing in it derogated from the employer's right at common law to dismiss a pilot without notice for "proven misconduct or other proven sufficient cause". Clause 12 provided that where a person is dismissed for redundancy he is entitled to a redundancy payment based on a formula involving the person's level of pay and years of service.

The trial Judge found that there were pilots surplus to requirements as at 25 March 1985, the date the plaintiff was given his termination notice. He found that there was some oversupply of pilots at that time. He found that although there was an oversupply of pilots, the reason why the plaintiff was chosen for termination (and not a less senior pilot who would have been entitled to a smaller redundancy payment) was the management's belief that he was guilty of misconduct. The trial Judge found that the "main reason" for the plaintiff's termination was the management's belief that he was guilty of misconduct. The trial Judge said:

"I find therefore, as a matter of law, that the plaintiff was not retrenched mainly for the reason that he was redundant.

That however by no means disposes of the plaintiff's case. His claim that the representations of fact made to him by the defendant (through its servants) raise estoppel in pais, is a powerful one."

The trial Judge went on to say that Air Niugini's termination letter to the plaintiff was a representation that he was not being terminated for misconduct. The letter thanked him for his dedicated service and terminated him with honour. The trial Judge found that that representation was not withdrawn, the plaintiff acted on it to his detriment and that the defendant was estopped from saying that it believed the plaintiff was guilty of misconduct. This meant, said the trial Judge, that the "only remaining reason" for termination of the plaintiffs contract was that the plaintiff had become surplus to requirements. This was because the decision to sell the two Boeing-707s and replace them by a single Airbus drastically reduced the airline's international operations and the plaintiff, who was a senior Boeing- 707 pilot, had become redundant.

The finding that there were pilots surplus to requirements at the time of the plaintiff's dismissal was open to the learned trial Judge. The most important piece of evidence in favour of the plaintiff's case was an internal memo from the General Manager, Masket Iangalio, to the Personnel Manager, Paul Aisa, dated 25 March 1985 as follows:

"Termination Notice — Capt...