Madiu Andrew v Mineral Resources Development Company Ltd, Koiari Tarata, Chairman—Board of Directors and Sir Mekere Morauta, Kt, MP, Prime Minister (2004) N2601

• Jurisdiction: Papua New Guinea
• Court: National Court
• Citation: (2004) N2601
• Date: 02 April 2004
• Year: 2004

Full Title: Madiu Andrew v Mineral Resources Development Company Ltd, Koiari Tarata, Chairman—Board of Directors and Sir Mekere Morauta, Kt, MP, Prime Minister (2004) N2601

National Court: Kandakasi J

Judgment Delivered: 2 April 2004

1 EMPLOYMENT CONTRACT—Written contract of employment—Termination of—No issue on validity of termination—Only issue whether contract varied to include final payout tax free to employee—No evidence of any variation of the contract in accordance with the contract—Law requires all income earners to pay tax—If an employer is to pay its employee's tax there must be specific and clear agreement on it.

2 TAXATION—Personal income tax—Liability of employers and employees—Personal income tax a personal liability of employees—If employer is to pay such tax specific and clear agreement is required.

3 Teio Raka Ila v Wilson Kamit (2002) N2291, PNGBC v Jeff Tole (2002) SC694, Steven Charles Pickthall v Lae Plumbing Pty Ltd [1994] PNGLR 363, Andrew Moka v MVIL (2001) N2098, Arlene Pitil v Rutis Clytus (2003) N2422, Curtain Brothers (Queensland) Pty Ltd and Kinhill Kramer Pty Ltd v The Independent State of Papua New Guinea [1993] PNGLR 285, Odata Ltd v Ambusa Copra Oil Mill Ltd (2001) N2106, Papua New Guinea Forest Authority v Concord Pacific Ltd (No 2) (2003) N2465, Dan Kakaraya v The Ombudsman Commission (2003) N2478, Peter Aigilo v The Independent State of Papua New Guinea (2001) N2102 referred to

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Kandakasi J: The plaintiff is claiming damages in terms of the balance of his contract entitlement for unlawful dismissal by the defendants. Prior to his dismissal, he was the managing director of the first defendant under a written contract of employment.

The matter came before me for trial on 15 December 2003. At the commencement of the trial, the Court drew the plaintiff's counsel's attention to its judgment in Teio Raka Ila v Wilson Kamit (2002) N2291 as the circumstances in that case and the present were similar. On the plaintiff's request, the Court granted a short adjournment for the plaintiff to consider the judgment and then decide whether to pursue his claim or not. On the return of the matter, the plaintiff informed the Court that, except for a claim for a reimbursement of income tax deducted from his final payout, he was abandoning the rest of his claim. The trial therefore, proceeded only in respect of the issue of reimbursement of income tax deducted from his final payout.

After the hearing, counsels wanted to file written submissions and asked for a short adjournment. I was initially reluctant to adjourn, but as I was soon going away on leave, I granted the application and directed the parties to file their respective submissions by 18th and any replies thereto by 19 December 2003. The Court received only the defendants' submission.

The Relevant Fact

The relevant facts are simple and straightforward. They have agreed to the relevant facts in most respects and they are these. The first defendant employed the plaintiff under a written contract of employment dated 16 November 1999. The contract was for a period of 4 years. However, nine months prior to the agreed date of termination, the defendants on 2 August 2001, summarily and without cause, terminated the plaintiff's employment and his contract with payment in lieu of notice. The plaintiff received a total of K447,444.17 upon his termination after allowing for the appropriate level of tax. The total tax deducted and paid to the Internal Revenue Commission (IRC) was K244,599.97.

The plaintiff went into oral evidence and apart from confirming the above facts; he added that, it was an implied term of the contract that, upon termination, he was entitled to receive...