Timothy Con v Jant Limited (2014) N5503

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 21 February 2014
• Court: National Court
• Citation: (2014) N5503
• Docket Number: WS NO 1019 OF 2013
• Year: 2014
• Judgement Number: N5503

Full Title: WS NO 1019 OF 2013; Timothy Con v Jant Limited (2014) N5503

National Court: Cannings J

Judgment Delivered: 21 February 2014

N5503

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1019 OF 2013

TIMOTHY CON

Plaintiff

V

JANT LIMITED

Defendant

Madang: Cannings J

2013: 13 December,

2014: 7, 21 February

LAW OF EMPLOYMENT –written contract of service – whether employer breached contract by forcing employee to resign – whether contract of employment varied by agreement between parties – whether varied contract breached

The plaintiff was employed by the defendant from 1974 to 2012, during a large part of that time pursuant to written contracts of employment. The most recent contract was expressed to be of 12 months duration, commencing on 20 October 2011. On 20 March 2012 the plaintiff wrote a memo to the defendant, stating that he would like to retire at the end of that month, subject to the defendant paying for ship tickets and freight charges to his place of origin and other items. On 22 March 2012 the defendant responded, accepting the plaintiff’s retirement and setting out what he would be paid upon retirement. On 27 March 2012 the plaintiff and the defendant signed a memorandum of agreement, setting out the terms of the plaintiff’s retirement, which included that “the employee has agreed for the company to pay out his final entitlement by 30/3/2012”. On 29 March 2012 the defendant paid some but not all of the items referred to in the memorandum, taking the view that it should withhold others until after the plaintiff vacated a house it had provided to him as part of his contract of employment, which he was obliged to do, by 15 April 2012, pursuant to the memorandum of agreement. The plaintiff did not vacate the house by 15 April 2012 and the defendant did not pay for any of the withheld items, but it extended the date by which he was to vacate the house, to 29 April 2012. On 25 April 2012 the plaintiff commenced proceedings in the District Court, seeking an order restraining the defendant from evicting him. The District Court granted such an order on 26 April 2012, which remained in force until 17 September 2013 when, upon application by the defendant, it set aside the order of 26 April 2012 and ordered that the plaintiff vacate the house by 2 October 2013, failing which the Police were authorised to deliver possession to the defendant. On 23 September 2013 the plaintiff commenced proceedings against the defendant in the National Court, claiming damages for breach (by unlawful termination) of contract. The plaintiff argued that he was forced to resign. The defendants filed a defence, denying liability, and a trial was conducted, which addressed the issue of liability.

Held:

(1) The entry by the parties into the memorandum of agreement constituted a variation of the written contract of employment.

(2) There was insufficient evidence to support the assertion that the plaintiff did not freely enter into the memorandum of agreement or that he was forced to resign.

(3) The defendant breached the contract of employment as varied by the memorandum of agreement by its failure to pay all the items it was obliged to pay or provide to the plaintiff by the nominated date, 30 March 2012.

(4) The requirement for the plaintiff to vacate the house was conditional on him being paid or provided all the items the defendant was obliged by the contract (as varied by the memorandum of agreement) to pay or provide. There was no breach of contract by the plaintiff.

(5) It was declared that the defendant was in breach of the contract of employment (as varied by the memorandum of agreement) and that the plaintiff had established a cause of action in breach of contract and that the proceedings shall, subject to agreement of the parties otherwise, continue with a trial on assessment of damages.

Cases cited

The following cases are cited in the judgment:

Bio-Normalizer (PNG) Ltd v CPL (2009) N3649

Kurumbukari Ltd v Enfi (PNG) Ltd (2012) N4704

Nivani Ltd v China Jiangsu International Ltd (2007) N3147

STATEMENT OF CLAIM

These were proceedings in which the plaintiff sought to establish liability in damages for breach of a contract of employment.

Counsel

S Tanei, for the Plaintiff

J J Lome, for the Defendant

21 February, 2014

1. CANNINGS J: The question in this case is whether the defendant, Jant Ltd, is liable in breach of contract to the plaintiff, Timothy Con.

2. The plaintiff was employed by the defendant from 1974 to 2012, largely pursuant to written contracts of employment. The most recent contract was expressed to be of 12 months duration, commencing on 20 October 2011, under which the plaintiff’s position within the defendant was described as “Manager of Chip Mill section, subject to alterations from time to time”. The contract was not completed. Instead the following events occurred:

· On 20 March 2012 the plaintiff wrote a memo to the defendant, stating that he would like to retire at the end of that month, subject to the defendant paying for ship tickets and freight charges to his place of origin and other items.

· On 22 March 2012 the defendant responded, accepting the plaintiff’s proposal and setting out what he would be paid upon retirement.

· On 27 March 2012 the plaintiff and the defendant signed a memorandum of agreement, setting out the terms of the plaintiff’s retirement, which included that “the employee has agreed for the company to pay out his final entitlement by 30/3/2012”.

· On 29 March 2012 the defendant paid some but not all of the items referred to in the memorandum, taking the view that it should withhold others until after the plaintiff vacated a house it had provided to him as part of his contract of employment, which he was obliged to do, by 15 April 2012, pursuant to the memorandum of agreement.

· By 30 March 2012 the defendant had not paid the withheld items.

· By 15 April 2012 the plaintiff had not vacated the house and the defendant still had not paid any of the withheld items, but it extended the date by which the plaintiff was to vacate the house, to 29 April 2012.

· On 25 April 2012 the plaintiff commenced proceedings in the Madang District Court, seeking an order restraining the defendant from evicting him from the house.

· On 26 April 2012 the District Court granted the order sought by the plaintiff and the defendant was restrained from evicting him.

· On 17 September 2013 the District Court, in proceedings commenced by the defendant under the Summary Ejectment Act, set aside the order of 26 April 2012 and ordered that the plaintiff vacate the house by 2 October 2013, failing which the Police were authorised to deliver possession to the defendant.

· On 23 September 2013 the plaintiff commenced the present proceedings against the defendant in the National Court, claiming damages for breach (by unlawful termination) of contract.

· On 27 September 2013 the National Court stayed the District Court order of 17 September 2013.

· On 1 October 2013 the defendant filed a defence, denying liability.

· On 13 December 2013 the present trial commenced, with the admission of evidence.

· On 7 February 2014 submissions were made.

IS THE DEFENDANT LIABLE IN BREACH OF CONTRACT?

3. I find that it is, though not precisely in the manner alleged by the plaintiff. I find insufficient evidence to support the assertion that the plaintiff was forced to resign or that he did not freely enter into the memorandum of agreement.

4. However, the entry by the parties into the memorandum of agreement constituted a variation of the written contract of employment. A written contract, even one that makes no provision for variation, may be varied by agreement between the parties; and the agreement to vary the contact may be express or implied (Nivani Ltd v China Jiangsu International Ltd (2007) N3147, Bio-Normalizer (PNG) Ltd v CPL (2009) N3649, Kurumbukari Ltd v Enfi (PNG) Ltd (2012) N4704).

5. Here, there was no express variation of the original contract, but there was an implied variation: the parties were agreeing on the terms on which the contract, and the plaintiff’s employment, would be terminated.

6. The memorandum of agreement, expressed to “take effect on the 30 March 2012”, stated:

1 The employee retired due to inadequate job availability as a result of scaling down of woodchips production.

2 The company and the employee have agreed to the retirement on the above date and as such the company offered to pay as a token of appreciation for the years of service to the company. This payment is paid as bonus on top of his final entitlements:

i. 5 months advance payment (10 fortnights)

ii. Freight for cargoes – MAG/LAE/LABLAB (Siassi) (K1,918.54)

iii. Passenger fare (4 children) – Lae/Lablab (K384.00)

iv. Roofing iron (6 ft * 30 sheets) (K1,053.00)

v. Chainsaw head – second hand (K1,200.00)

vi. Air ticket for 2 adults – MAG/LAE (K1,050.00).

3 The company has agreed for the employee to occupy the current company house till 15/04/2012. The employee shall vacate the property after the said date...