The Independent State of Papua New Guinea v Hodson [1987] PNGLR 241

• Jurisdiction: Papua New Guinea
• Judge: Kidu CJ, Kapi DCJ, Barnett J
• Judgment Date: 03 April 1987
• Court: Supreme Court

Full Title: The Independent State of Papua New Guinea v Hodson [1987] PNGLR 241

Supreme Court: Kidu CJ, Kapi DCJ, Barnett J

Judgment Delivered: 3 April 1987

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

V

HODSON

Waigani

Kidu CJ Kapi DCJ Barnett J

24 June 1986

3 April 1987

MASTER AND SERVANT — Contract of employment — Construction of — Recruitment of non — citizen to skilled position — Position filled by another — Required to work in less skilled position — Clause agreeing to serve in any other capacity — Clause not intended to displace service contracted for — Clause conferring discretion — Discretion to be exercised reasonably and fairly — Contract breached.

A non-citizen was recruited from the United Kingdom to the Taxation Office, Department of Finance, to a position described in the contract of employment as Chief Investigations Officer. On arrival in Papua New Guinea he was informed that the position had been filled and that he would be required to work in a subordinate position as a Supervisor in Investigations, which he did, under protest, in accordance with cl 4 of his contract of employment which provided:

"The employee agrees to serve the employer in the office and in the Public Authority described in the schedule hereto. The employee agrees to serve in such other capacity or in such other Public Authority or in such locality as the employer may determine, but in no event shall the remuneration payable to the employee under cl 7.1 of this agreement be reduced."

On appeal from an award of damages for breach of contract, which included a component for damages for distress, frustration and general disappointment caused by relegation to a position of lesser responsibility,

Held

(1) Properly construed cl 4 of the contract was not intended to be used to prevent a person from getting a particular position he or she had been contracted for and was not intended to be used by an employer or its servants or agents to manipulate non-citizen officers of the Public Service: the clause confers a wide discretion on the employer which should only be exercised on grounds or for reasons which are reasonable and/or justifiable and (by Kapi Dep CJ) having regard, inter alia, but principally, to work and employment related matters.

(2) In preventing the employee from entering into service in the office described in the contract there was a fundamental breach of contract for which damages were payable.

Hodson v Independent State of Papua New Guinea [1985] PNGLR 303, affirmed for different reasons.

(3) The question of damages should be remitted to the trial judge for reassessment, as there was unsatisfactory evidence of the basis for the calculations made and no argument had been addressed to the court on the question of damages for distress, frustration and general disappointment.

Cases Cited

Archer v Brown [1985] QB 401; [1984] 3 WLR 350; [1984] 2 All ER 267.

Aspinall v Government of Papua New Guinea (No 2) [1980] PNGLR 50.

Aundak Kupil v Independent State of Papua New Guinea [1983] PNGLR 350.

Cox v Phillips Industries Ltd [1976] 1 WLR 638; [1976] All ER 161.

Cybula, John v Nings Agencies Pty Ltd [1981] PNGLR 120.

Jarvis v Swans Tours Ltd [1973] 1 QB 233.

Meaney v Hastings Deering (Pacific) Ltd [1979] PNGLR 170.

Thompson v Faraonio (1979) 54 ALJR 231.

Appeal

This was an appeal from a decision of Los J, viz, Hodson v Independent State of Papua New Guinea [1985] PNGLR 303, in which he awarded damages for breach of a contract of employment with the government of Papua New Guinea.

Counsel

J Goodman and L Karri, for the appellant/cross defendant.

J Ryan, for the respondent/cross appellant.

Cur adv vult

3 April 1987

KIDU CJ: This is an appeal against the whole of the National Court judgment on the matter. The cross-appeal by the respondent is based on the contention that the National Court erred in its decision that there was no negligent misrepresentation.

BREACH OF CONTRACT

Mr Hodson, an Englishman, applied for the position of Chief Investigations Officer in the Office of the Chief Collector of Taxes in the Department of Finance. He was interviewed by Mr Obara, an officer attached to the Papua New Guinea High Commissioner's Office in London. Subsequently he was told by Mr Obara that he had won the position and a contract was signed.

On 9 April 1984 Mr Hodson arrived in Papua New Guinea and to his amazement he was told by the Chief Collector of Taxes that he was not to be Chief Investigations Officer as another person had been recruited from New Zealand for the job. (This person had yet to sign a contract.) Mr Hodson was relegated to one of the lower positions of supervisor. He challenged this, although he did perform the functions of the position, by signing any documents as Acting Supervisor. The Public Service failed to rectify the matter to Mr Hodson's satisfaction and consequently he sued.

The appellant contends that there was no breach of contract by it as the contract allowed it to use Mr Hodson at any other capacity so long as his salary remained the same. Clause 4 of the contract reads:

"The employee agrees to serve the employer in the Office and in the Public Authority described in the schedule hereto. The Employee agrees to serve in such other capacity or in such other Public Authority or in such locality as the employer may determine, but in no event shall the remuneration payable to the employee under cl 7.1 of this agreement be reduced."

It must be emphasised from the outset that the reason Mr Hodson was demoted (without loss in pay) before he arrived at the office of the Chief Collector of Taxes was not because he was not qualified for the job he had contracted for, but because the Chief Collector, contrary to a perfectly valid contract, refused to allow him to perform the duties of that office as he had decided that another person, a New Zealander, was to be engaged for the position.

Mr Hodson Understood that under cl 4 of the contract he could be located in another position but it is quite clear from the evidence that he did not expect that cl 4 was to be utilised before he arrived in Papua New Guinea or on his first day at work.

The learned trial judge has set out in his judgment his views on the reasons for the existence of cl 4 of the contract. I have no quarrel with these reasons one way or the other. Also there may be other reasons. But for purposes of this case I consider one thing very clear and that is that cl 4 was not meant to be used to stop a person from getting a particular position he or she had contracted for and was not meant to be used by the employer or its servants or agents to manipulate non-citizen officers of the Public Service.

Clause 4 of the contract says three things very clearly:

(1) That the employee will serve in the office and Authority described in the schedule to the contract.

(2) That the employee will serve in such other capacity or in such other Public Authority or in such other locality as determined by the employer.

(3) That if (2) applies the employee will not lose any remuneration.

There is therefore no doubt about it. When a person enters into an employment contract with the State it is understood that when he arrives in Papua New Guinea he will first serve in the office described in the contract. In the case of Mr Hodson the schedule to the contract he signed reads, inter alia, as follows:

"1. CLAUSE 4 CHIEF INVESTIGATIONS OFFICER LEVEL 21 DEPARTMENT OF FINANCE (OFFICE OF TAXATION)."

So under the contract he executed, Mr Hodson was to commence employment in the Taxation Office as a Chief Investigations Officer and the State was obliged under the contract to allow him to commence work in that position. I consider that the terms of the contract are clear and that it is only after the employee has commenced work that the employer can consider utilising cl 4 unless, of course, the employee has agreed to cl 4 being utilised before he takes up his post. There is no evidence that Mr Hodson agreed to any such thing.

I support the finding of the learned trial judge that there was a breach of contract by the appellant although my reasons are different from those of his Honour. The breach went to the heart of the contract — ie the appellant had decided not to permit the respondent to occupy and perform the duties of the office that he (the respondent) had contracted for.

Of course if cl 4 (2) is utilised it must be on grounds or for reasons which are reasonable and/or justifiable — eg urgent requirement for the services of the employee in another office or the position is to be localised by appointment of a properly qualified citizen. Clause 4 (2) cannot be read to mean that a contract officer in the public service can be moved from an office or position or job he has contracted for without reasons. Such a construction would result in possible abuse of cl 4 and cause injustice to such employees. Employees would be moved at the mere whims of agents of the...