Legu Vagi v National Capital District Commission (2002) N2280

• Jurisdiction: Papua New Guinea
• Year: 2002
• Date: 23 August 2002
• Citation: [2002] PNGLR 100
• Court: National Court

Full Title: Legu Vagi v National Capital District Commission (2002) N2280

National Court: Kandakasi J

Judgment Delivered: 23 August 2002

1 CONTRACT OF EMPLOYMENT—Termination of written contract of employment—Suspension with pay before termination—Suspension not provided for in the written contract—Effect of—Grounds for termination on grounds of alleged misappropriation and mismanagement—Employers account in the red—Employee who is the chief financial or accounting officer unable to explain apart from merely blaming past administration—Contract of employment provides for instant dismissal for cause—Mismanagement or misappropriation amounts to cause—Termination was for cause—Judgment for the defendant.

2 Leo Nuia v The Independent State of Papua New Guinea (2000) N1986, Peter Aigilo v The Independent State of Papua New Guinea (No 1) (2001) N2103, Curtain Brothers (Queensland) Pty Ltd and Kinhill Kramer Pty Ltd v The Independent State of Papua New Guinea [1993] PNGLR 285, Steamships Trading Co Ltd v Joel [1991] PNGLR 133, Jimmy Malai v PNG Teachers Association [1992] PNGLR 568, Rooney v Forest Industries Council [1990] PNGLR 407, Nazel Wally Zanepa v Ellison Kaivovo (1999) SC623, Ereman Ragi v Joseph Maingu (1994) SC459, Bank of Australia v Palmer [1897] AC 540, Reliance Marine Insurance v Duder [1913] 1 KB 265, Tsang Chuen v Li Po Kwai [1932] AC 715 and O'Connor v Hume [1954] 1 WLR 824 referred to

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Kandakasi J: This is a claim by Mr Legu Vagi ("Mr Vagi") for damages allegedly for unlawful termination of his contract of employment ("the contract") with the National Capital District Commission ("NCDC") on 11 December 1998. Prior to that he was suspended with pay from 3 June to 12 December 1998, which Mr Vagi says was outside and therefore in breach of his contract with the NCDC. On the other hand, the NCDC says it lawfully terminated the contract for misappropriation and mismanagement. This it submits was a termination for cause within the meaning of clause 8 of the contract.

Issues for Determination

The main issue for determination therefore is this. Did the NCDC terminate Mr Vagi's contract in accordance with the terms of the contract? A subsidiary issue to that is whether the suspension prior to termination amounted to a breach of the contract and if so what is the legal effect on the contract? A further issue for consideration is, if the termination is found to be unlawful what are Mr Vagi's damages, if any?

Evidence

The relevant evidence is in affidavit form for both parties together with some oral evidence from Mr Vagi under cross–examination. The affidavits for Mr Vagi are from himself sworn respectively twice on the 20 February 2002 and one on the 18 June 2002. These were admitted into evidence without any objection from the NCDC and are marked as exhibits "A", "B" and "C". The NCDC's affidavits are from Mr Bernard Kipit sworn respectively on the 11 February and 14 July 2000. These affidavits were also admitted into evidence without any objection from Mr Vagi. They are marked as exhibits "D1" and "D2" respectively.

Facts

The facts from these evidence are straight forward and I find the relevant facts to be this. Mr Vagi was employed as its chief executive officer by the NCDC under the title "City Manager" under a written contract. The contract commenced on 23 December 1997 and was to expire on 23 December 2000. He took up his office on 23 December 1997. By letter dated 2 June 1998, Mr Vagi was suspended allegedly for mismanagement and misappropriation of public funds resulting in the NCDC's main operation account with the then Papua New Guinea Banking Corporation ("PNGBC") running into a debt of K1.6 million in overdrafts. He was on full pay except for his motor vehicle and such other allowances that were rendered unnecessary by reason of the suspension from official duties.

On 12 June 1998, Mr Vagi was served with a further suspension notice extending the period of suspension to 12 September 1998. That notice also contained formal disciplinary charges laid against him. Mr Vagi says he responded to the charges under cover of a letter dated 12 June 1998. He does not say, how or to whom his responses were delivered. The NCDC says no responses were received from Mr Vagi. Mr Vagi was cross–examined but not on this aspect. The evidence for the NCDC is from Mr Kipit in his affidavit of 14 July 2000. He was not cross–examined in any respect. That means his evidence stands admitted or accepted by Mr Vagi. What the NCDC says is consistent with the minutes of its Board that eventually met and resolved to terminate Mr Vagi, on 11 December 1998 (Annexure "C"). Those minutes note that Mr Vagi had not responded to the Governor's letters.

In his responses Mr Vagi took issue on the validity of the suspension and the laying of the charges against him. At the same time he blamed the officers below him for providing inaccurate information, if the NCDC found his advice to its Board was misleading. A clearer statement of that is in paragraph 7.10, 8.13 and 8.14 of his response, which reads:

"For your information which can be confirmed by the Director, Finance and Administration and the Financial Controller that any payment over K10,000.00 that came across to me for my signature I would always asked (sic) them if there were sufficient funds for such payment. Only and repeat only when these two gentlemen gave me the assurance that there was (sic) sufficient funds in the bank—then I would sign these cheques. Otherwise, without their advice I never signed the cheques until there was funds available in the banks."

In relation to the main allegation of mismanagement and misappropriation of public funds, Mr Vagi made reference to an earlier advice to the NCDC Board and Finance and Administration Committee and admitted to the establishment of a K2.0 million–overdraft facility with the PNGBC. Of that, K1.6 million was used up. He also spoke of K2.5 million in cheques being raised and issued to various contractors while a further K1.7 million in cheques were raised but not yet issued. He anticipated an...