Teio Raka Ila v Wilson Kamit, Governor of Bank of Papua New Guinea and Bank of Papua New Guinea (2002) N2291

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi J
• Judgment Date: 11 October 2002
• Court: National Court
• Citation: (2002) N2291
• Year: 2002
• Judgement Number: N2291

Full Title: Teio Raka Ila v Wilson Kamit, Governor of Bank of Papua New Guinea and Bank of Papua New Guinea (2002) N2291

National Court: Kandakasi J

Judgment Delivered: 11 October 2002

1 EMPLOYMENT CONTRACT—Employment contract with public authorities—Contract approved by relevant statutory authority on standard terms of employment—Executed Contract outside standard terms—Executed Contract void and unenforceable.

2 Employment with public authority—Specific approval of terms by Salaries and Condition Monitoring Committee required—Failure to obtain such approval amounts to void and unenforceable contract pursuant to s10(2) of Salaries and Conditions Monitoring Committee Act 1988 (SCMC Act).

3 Members of Board of public authorities determining and pay salaries and other entitlement without SCMC approval attracts personal liability—State entitled to recover from them.

4 STATUTORY INTERPRETATION—Salaries and Conditions Monitoring Committee Act 1988—Purpose of Act is to give effect to the governments' wages policy and to control public expenditure—Therefore approval by the SCMC of terms of employment by public authorities necessary and important—Failing to obtain such approval is critical—Contract of employment without SCMC approval void and unenforceable—Any payment under such contract recoverable by the State from the members of the governing body of relevant authority s10 Salaries and Conditions Monitoring Committee Act 1988.

5 DAMAGES—Unlawful dismissal—Measure of damages—Usually by reference to period of notice—Damages are payable for injury or loss actually suffered by reference to the terms of the contract—A term that in effect prevents either of the parties from their right to terminate early amounts to a threat or a penalty—Such provisions are unenforceable—Enforcement of such terms may amount to forced labour or unjust enrichment—An agreement entitling an employee for a full pay out of balance of his contract amounts to a threat and a penalty—Such a term is enforceable.

6 Present case—Plaintiff paid more than what he was legally entitled to—Further payments rejected—No damage or loss suffered—Claim dismissed.

7 COSTS—Action did not exist in law—Plaintiff warned of costs being claimed on own solicitor and client basis—Costs ordered on own Solicitor and Client basis.

8 Patterson v NCDC (2001) N2145, Panga Coffee Factory Pty Ltd v Coffee Industry Corporation Ltd (1999) SC619, Credit Suisse v Allerdale BC [1996] 4 All ER 129, Post PNG Ltd v Yama Security Services Ltd (2001) (Unreported and unnumbered judgment delivered on 26 July 2001; SCA 80 of 2000), Paul Toua v Finance Pacific Limited (2002) (Unreported and unnumbered judgment delivered on 19 July 2002; WS No 1338 of 1999) and PNGBC v Jeff Tole (2002) SC694 referred to

___________________________

N2291

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 866 OF 2000

BETWEEN:

TEIO RAKA ILA

Plaintiff

AND:

WILSON KAMIT,

GOVERNOR OF BANK OF PAPUA NEW GUINEA

First Defendant

AND:

BANK OF PAPUA NEW GUINEA

Second Defendant

WAIGANI: KANDAKASI, J.

2002: 26th August

11th October

EMPLOYMENT CONTRACT – Employment contract with public authorities – Contract approved by relevant statutory authority on standard terms of employment – Executed Contract outside standard terms – Executed Contract void and unenforceable.

Employment with public authority – Specific approval of terms by Salaries and Condition Monitoring Committee required – Failure to obtain such approval amounts to void and unenforceable contract pursuant to s.10 (2) of Salaries and Condition Monitoring Committee Act (SCMC Act).

Members of Board of public authorities determining and pay salaries and other entitlement without SCMC approval attracts personal liability – State entitled to recover from them.

STATUTORY INTERPRETATION – Salaries and conditions Monetary Committee Act 1995 – Purpose of Act is to give effect to the governments’ wages policy and to control public expenditure – Therefore approval by the SCMC of terms of employment by public authorities necessary and important – Failing to obtain such approval is critical – Contract of employment without SCMC approval void and unenforceable – Any payment under such contract recoverable by the State from the members of the governing body of relevant authority s.10 SCMC Act.

DAMAGES – Unlawful dismissal – Measure of damages – Usually by reference to period of notice – Damages are payable for injury or loss actually suffered by reference to the terms of the contract – A term that in effect prevents either of the parties from their right to terminate early amounts to a threat or a penalty – Such provisions are unenforceable – Enforcement of such terms may amount to forced labour or unjust enrichment – An agreement entitling an employee for a full pay out of balance of his contract amounts to a threat and a penalty – Such a term is enforceable.

Present case – Plaintiff paid more than what he was legally entitled to – Further payments rejected – No damage or loss suffered – Claim dismissed.

COSTS – Action did not exist in law – Plaintiff warned of costs being claimed on own solicitor and client basis – Costs ordered on own Solicitor and Client basis.

Cases Cited:

Jack Livinai Patterson v. National Capital District Commission (unreported judgement) N2145.

Panga Coffee Factory Pty Ltd v. Coffee Industry Corporation Limited (unreported judgement) SC619.

Credit Suisse v. Allerdale BC [1996] All ER 12.

Post PNG Ltd v. Yama Security Services Ltd (unreported and unnumbered judgement delivered on 26th July 2001) SCA 80 of 2000 at pp. 4-5.

Paul Toua v. Finance Pacific Limited (unreported and unnumbered judgement delivered on 19th July 2002) WS No. 1338 of 1999.

Papua New Guinea Banking Corporation v. Jeff Tole (unreported judgement) SC 694.

Counsel:

Mr. C. Makail for the Plaintiff

Mr. E. Andersen for the Defendants

11th OCTOBER 2002

KANDAKASI J: This is a claim by the plaintiff (Mr. Ila) for a full pay out of the balance of his contract for a sum exceeding K400,000.00 for wrongful dismissal.

Mr. Ila was employed as an executive officer to the previous governor to the Bank of Papua New Guinea (the Bank), Mr. Morea Vele. The Bank did not previously have the position of an executive officer to its governor. Mr. Vele created the position and had it classified as a senior management position. He then had a written contract of employment signed on 19th April 1999, with effect from 1st December 1998, for four years (the executed contract) between the Bank and Mr. Ila. The Bank being a public institution was required to apply for and receive an approval of the terms of the contract of employment but no specific approval was sought and obtained from the Salaries and Conditions Monitoring Committee (SCMC). The current governor, Mr. Wilson Kamit abolished the position created by his predecessor and made Mr. Ila redundant before the agreed end of his contract.

The Bank argues that the contract is unenforceable because no approval of it was sought and obtained from the SCMC as required under the Salaries and Conditions Monitoring Committee Act (the SCMC Act). The Bank further argues that even if the contract was approved by the SCMC, the provision in the contract allowing for a pay out of the balance of the contract is in fact a penalty provision which can not be enforced. Furthermore, the Bank argues that, Mr. Ila was employed on the Banks usual terms and conditions for managers which has been approved by the SCMC and that Mr. Ila has been lawfully terminated in accordance with those terms.

On the 5th of August 2002, I directed the parties to file an agreed and disputed statement of facts and the issues for trial. I am indebted to both counsel for having complied with that direction, resulting in the filing of a statement of agreed and disputed facts dated the 26th of August 2002. This as resulted in an agreement on the relevant facts and parties needing only to make submissions on the issues before me. This has considerably reduced trial time and therefore costs. I would encourage counsel in this matter and all other counsel before the courts to talk more and only allow matters that can not be...