Roslyn Yanoda v Telikom PNG Ltd

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 13 February 2015
• Citation: (2015) N5861
• Court: National Court
• Year: 2015
• Judgement Number: N5861

Full : OS No 195 of 2014; Roslyn Yanoda, John Lababana, Ben Mambi, Men Yegigori, Beno Waliken, Benson Elias, Dube Bal, Edwin Pulung, Lawrence Worio, Paul Wulbou, Peter Kerry, Russel Balifun & Tasan Mebager v Telikom PNG Limited and the Independent State of Papua New Guinea (2015) N5861

National Court: Cannings J

Judgment Delivered: 13 February 2015

N5861

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS NO 195 OF 2014

ROSLYN YANODA, JOHN LABABANA, BEN MAMBI, MEN YEGIGORI, BENO WALIKEN, BENSON ELIAS, DUBE BAL, EDWIN PULUNG, LAWRENCE WORIO, PAUL WULBOU, PETER KERRY,

RUSSEL BALIFUN & TASAN MEBAGER

Plaintiffs

V

TELIKOM PNG LIMITED

First Defendant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Second Defendant

Madang: Cannings J

2014: 3 December,

2015: 13 February

LAW OF EMPLOYMENT – redundancy agreements – whether decision of National Executive Council regarding tax exempt payments was enforceable – whether a memorandum of agreement between an industrial union and an employer must be registered under Industrial Organisations Act – whether employer could be ordered to pay amounts deducted in tax to retrenched employees.

REMEDIES – declarations – whether the relief sought by plaintiffs involved real controversy with the defendants – whether relief sought should be refused due to failure to seek consequential orders.

The National Executive Council decided to implement a “National Broadband Project Implementation Study”, which would involve restructuring the State-owned telecommunications network and the State-owned company, Telikom PNG Ltd, and lead to a number of Telikom employees being made redundant. As part of Decision No 107/2011, the NEC “approved the exempt tax obligations on redundancy entitlements of Telikom and/or its subsidiaries staff affected by the implementation of the Implementation Study recommendations”. Telikom subsequently entered into a memorandum of agreement with a union representing its employees regarding the redundancy exercise necessitated by the company’s restructure. The agreement set out which employees were eligible for redundancy and how their redundancy payments would be calculated. The 13 plaintiffs are former Telikom employees who were eligible for redundancy and elected to take part in the redundancy exercise. They were each paid redundancy payments calculated in accordance with their length of service and other criteria prescribed in the MOA. They accepted the payments in February 2013, but were aggrieved by the amounts of the payments. They commenced proceedings in the National Court by originating summons in February 2014 seeking various declarations, including that Telikom had failed to comply with the NEC Decision and that the 2011 MOA is null and void. Their essential grievance is that they were under-paid their redundancy payments in two respects: (a) the payments were not exempt from tax, as required by the NEC Decision and (b) the payments were calculated according to the formula in the 2011 MOA, which is a less generous formula than that in the 2010 enterprise agreement, which is a registered industrial award, which is the formula that they claim should have been applied. Telikom argued in response, as a preliminary issue, that all relief sought should be refused as the plaintiffs had sought only declarations and no actual orders for consequential relief. As to the merits of the proceedings, Telikom argued that the payments made to the plaintiffs were correct and in accordance with law as it was not lawful or practicable to make the payments exempt from tax (and to the extent that there was an obligation to make the payments exempt from tax, this was the responsibility of other governmental bodies, not Telikom’s) and the formula in the 2011 MOA was the correct one as the MOA had been entered into in good faith with the union representing Telikom employees.

Held:

(1) Though the principal relief was in the form of declarations and no orders for consequential relief were expressly sought, there was a real controversy at the centre of the case: a grievance about underpayment of redundancy payments. The question of whether the declarations should be granted was not merely of academic interest or hypothetical in nature. There was no abuse of process. It was open to the Court to make orders to do justice in the circumstances of the case under Section 155(4) of the Constitution. The originating summons, though drafted in a novel manner, was not so inappropriately drawn as to prevent the Court making efficacious and meaningful orders that would determine the real issues in dispute.

(2) Telikom was obliged to ensure that the redundancy payments were tax exempt. It failed to discharge that obligation.

(3) As to the formula for calculation, the formula in the 2011 was the correct one as the MOA had been entered into in good faith with the union representing Telikom employees and it was neither unlawful nor unenforceable.

(4) Declarations to the above effect were made, and the Court made consequential orders under Section 155(4) of the Constitution to give effect to the primary rights and obligations so declared, in that it was ordered that: the redundancy payments of each plaintiff are to be recalculated in accordance with the declarations so as to identify the correct amount of tax to be remitted to the Internal Revenue Commission, and the correct amount having been identified, Telikom is liable to pay that amount to the plaintiff concerned.

(5) The parties were given three weeks within which to reach agreement on the amounts due and payable to the plaintiffs, failing which directions will be given for a trial on assessment of those amounts.

Cases cited

The following cases are cited in the judgment:

Application Pursuant to s 155(4) by John Mua Nilkare (1997) SC536

Avia Aihi v The State (No 1) [1981] PNGLR 81

Bill Skate and Peter O'Neil v Jeffrey Nape, Speaker of Parliament (2004) SC754

Donigi v The State [1991] PNGLR 376

Gabriel Yer v Peter Yama (2009) SC996

John Manau v Telikom (PNG) Ltd (2011) SC1146

Louis Medaing v Ramu Nico Management (MCC) Ltd (2011) SC1156

Ok Tedi Mining Ltd v Niugini Insurance Corporation (No 2) [1988-89] PNGLR 425

Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438

SCR No 2 of 1981 [1981] PNGLR 150

The State v Central Provincial Government (2009) SC977

Ume More v UPNG [1985] 401 at 402

Abbreviations

The following abbreviations appear in the judgment:

AC – Appeals Cases

ADR – Alternative Dispute Resolution

CEO – Chief Executive Officer

IPBC – Independent Public Business Corporation

IRC – Internal Revenue Commission

J – Justice

MOA – Memorandum of Agreement

N – National Court judgment

NEC – National Executive Council

PNGLR – Papua New Guinea Law Reports

SC – Supreme Court judgment

SC Ref – Supreme Court Reference

ORIGINATING SUMMONS

This was a trial in which the plaintiffs sought declarations as to the rights and obligations of the parties in regard to a redundancy exercise.

Counsel

T Kamuta, for the plaintiffs

C K Kuira, for the first defendant

S Phannaphen, for the second defendant

13th February 2015

1. CANNINGS J: The plaintiffs are former employees of Telikom PNG Ltd. They participated in a redundancy program in the period from 2011 to 2013. They received their payouts in early 2013. They say that they were under-paid. They have applied to the court by originating summons seeking declarations as to their rights and the obligations of Telikom.

BACKGROUND

2. In 2011 the National Executive Council decided to implement a “National Broadband Project Implementation Study”, which would involve restructuring the State-owned telecommunications network and the State-owned company, Telikom PNG Ltd, and lead to a number of Telikom employees being made redundant. As part of a formally recorded and numbered decision, No 107/2011, the NEC:

approved the exempt tax obligations on redundancy entitlements of Telikom and/or its subsidiaries staff affected by the implementation of the Implementation Study recommendations.

3. Telikom subsequently entered into a memorandum of agreement with a union representing its employees, the PNG Communication Workers Union, regarding the redundancy exercise necessitated by the restructuring of Telikom. This agreement was entitled “Memorandum of Agreement on 2011 Voluntary Redundancy Exit Plan (VES)”. The agreement set out, amongst other things, which employees were eligible for redundancy and how their redundancy payments would be calculated.

4. The 13 plaintiffs, who are former Telikom employees based in Madang, were eligible for redundancy and elected to take part in the redundancy exercise. They were each paid redundancy payments calculated in accordance with their length of service and other criteria prescribed in the MOA. They accepted the payments in February 2013. Approximately 500 Telikom employees participated in the redundancy exercise.

5. They appear to have signed deeds of release, acknowledging that they accepted the payments as full and final...