Vitus Sukuramu v New Britain Palm Oil Limited and Neil Smith and Ben Tonaim and Karl Aisi (2007) N3124

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 16 February 2007
• Court: National Court
• Citation: (2007) N3124
• Docket Number: WS NO 1175 OF 2003
• Year: 2007
• Judgement Number: N3124

Full Title: WS NO 1175 OF 2003; Vitus Sukuramu v New Britain Palm Oil Limited and Neil Smith and Ben Tonaim and Karl Aisi (2007) N3124

National Court: Cannings J

Judgment Delivered: 16 February 2007

N3124

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1175 OF 2003

VITUS SUKURAMU

Plaintiff

V

NEW BRITAIN PALM OIL LIMITED

First Defendant

AND:

NEIL SMITH

Second Defendant

AND:

BEN TONAIM

Third Defendant

AND:

KARL AISI

Fourth Defendant

Kimbe: Cannings J

2006: 24 March, 7 June

2007: 16 February

JUDGMENT

LAW OF EMPLOYMENT – contract of service – termination of contract for cause – wrongful dismissal claim – alleged breach of contract – whether termination lawful – terms of contract – express and implied terms – whether employee’s right to be heard prior to dismissal is an implied term – whether Company Regulations giving right of appeal are incorporated as terms of contract.

UNDERLYING LAW – common law – principle that employer can hire and fire at will, with or without good reasons and without giving right to be heard – whether appropriate to circumstances of the country – duty of National Court to develop underlying law as a coherent system – formulation of new rule of law as part of underlying law – Constitution, Section 20 (underlying law and pre-Independence statutes), Section 21 (purpose of Schedule 2) – development of indigenous jurisprudence – Underlying Law Act 2000, Section 5 (duty of courts); Section 7 (formulation of law).

The plaintiff was employed as a carpenter under a written contract of employment with the first defendant. He had an argument with his supervisor and allegedly threatened him with personal violence and damaged his employer’s property. Six days later he was sacked on the ground of misconduct. He appealed to a senior manager of the company but his appeal was dismissed and termination of his employment confirmed. He commenced legal proceedings against the employer, claiming he was dismissed without good cause and contrary to the principles of natural justice.

Held:

(1) Wrongful dismissal cases are properly regarded as proceedings in which the cause of action is breach of contract.

(2) To determine whether there has been a breach, the particular contract of employment must be interpreted to ascertain whether the right to be heard prior to dismissal and/or a right of appeal against dismissal are terms of the contract.

(3) Terms of a contract of employment can be express or implied.

(4) Under the common law, previously applied as part of the underlying law, the rule is that a right to be heard prior to dismissal is not implied as a term of a contract of employment; the common law being that an employer can hire and fire at will, with or without good reasons and without giving a right to be heard. (Jimmy Malai v PNG Teachers Association [1992] PNGLR 568 considered.)

(5) That rule of the underlying law is no longer considered appropriate to the circumstances of the country. Maintaining it would be adverse to development of the underlying law as a coherent system in a manner appropriate to the circumstances of the country.

(6) Accordingly the court formulated a new rule of law, appropriate to the circumstances of the country, under the Underlying Law Act 2000, viz the implied terms of a contract of employment include that the principles of natural justice and the constitutional right of protection against harsh or oppressive or other proscribed acts apply.

(7) In the present case, the evidence supported a conclusion that the plaintiff did, in fact, threaten his supervisor with personal violence and that the incident may have been serious enough to warrant the plaintiff’s dismissal, for cause.

(8) However, under the contract of employment, exercise of the employer’s power of dismissal for cause was subject to (a) implied terms, including that the employer would give the plaintiff a right to be heard on why he ought not to be dismissed for cause and that it would not act harshly or oppressively; and (b) an express term that gave a right of appeal under the Company Regulations.

(9) The first defendant breached the contract by not according a right to be heard, terminating the contract without referring to the termination provisions of the contract and not allowing a fair appeal.

(10) The plaintiff succeeded in establishing liability against the first defendant for breach of contract. The matter will proceed to trial on assessment of damages.

Cases cited:

Papua New Guinea Cases

Rakatani Peter v South Pacific Brewery Ltd [1976] PNGLR 537

Ralph Premdas v The State [1979] PNGLR 329

Iambakey Okuk v Gerald Fallscheer [1980] PNGLR 274

Papua New Guinea Air Pilots Association v The Director of Civil Aviation and the National Airline Commission trading as Air Niugini [1983] PNGLR 1

Enforcement of Rights Pursuant to Constitution, Section 57; Application of Karingu [1988–89] PNGLR 276

Jimmy Malai v PNG Teachers Association [1991] PNGLR 116

Steamships Trading Co Ltd v Joel and Others [1991] PNGLR 133

Jimmy Malai v PNG Teachers Association [1992] PNGLR 568

National Executive Council, the Attorney-General and Luke Lucas v Public Employees Association of Papua New Guinea [1993] PNGLR 264

Bruno Baiwan v University of Papua New Guinea [1995] PNGLR 18

Paddy Fagon v Negiso Distributors Pty Ltd (1999) N1900

Michael Kandiu v ANZ Banking Group (PNG) Ltd (2002) N222

Legu Vagi v NCDC (2002) N2280

Patrick Dissing v Cocoa Board (2002) N2314

Igiseng Investments Ltd v Starwest Constructions Ltd (2003) N2498

Wilson Thompson v NCDC (2004) N2686

Pama Anio v Aho Baliki and Bank South Pacific Ltd (2004) N2719

Ayleen Bure and Others v Robert Kapo (2005) N2902

Paul Lingei v Ok Tedi Mining Ltd (2005) N2912

SCR No 2 of 2004; Special Reference Pursuant to Constitution Section 19 by the Morobe Provincial Executive Re Enhanced Co-operation Between Papua New Guinea and Australia Act 2004 (2005) SC785

Commodore Peter Ilau v Rt Hon Sir Michael Somare OS No 889 of 2006, 12.01.07

Overseas Cases:

Ridge v Baldwin [1964] AC 40

STATEMENT OF CLAIM

These were proceedings in which a person sought to establish liability in damages for breach of a contract of employment, based on wrongful dismissal.

Counsel

B Takin, for the plaintiff

J Elijah, for the defendants

16 February, 2007

1. CANNINGS J: Introduction: This case is about a man – the plaintiff – who was sacked by his employer. He had an argument with his supervisor about the use of a company vehicle and, allegedly, threatened his supervisor with personal violence. He was sacked six days after that incident.

2. The plaintiff says he was unlawfully terminated as the incident was blown out of proportion. He also says he was not given a right to be heard. He seeks damages for wrongful dismissal.

3. This is a trial to determine whether the employer is liable.

4. The case raises important issues about the rights and duties of employers and employees. In particular, does an employee have a right to be heard before he or she is sacked? The defendants say no. The plaintiff says yes. The conventional approach of the courts in Papua New Guinea has been to say no. They have applied the common law as part of the underlying law. The plaintiff urges this court to take a fresh look at the law.

5. The terms ‘sacked’, ‘terminated’, ‘dismissed’ and ‘fired’ are used interchangeably. They mean the same thing.

6. The parties are:

· the plaintiff – Vitus Sukuramu – the sacked employee;

· the first defendant – New Britain Palm Oil Ltd – the employer, also called “the company”;

· the second defendant – Neil Smith – manager of the company’s facilities and constructions department (the construction manager);

· the third defendant – Ben Tonaim – assistant manager of the company’s facilities and constructions department (the assistant construction manager) – the supervisor involved in the incident with the plaintiff; and

· the fourth defendant – Karl Aisi – the company’s training manager – the manager who dismissed the plaintiff’s appeal against termination.

EVIDENCE

7. For the plaintiff, two affidavits were admitted into evidence. The first was by the plaintiff and the second by Simon Kerua, a company employee who witnessed the incident that led to the plaintiff’s sacking. Both of them gave oral evidence and were subject to cross-examination.

8. For the defendant, four affidavits were admitted into evidence. The first was by Theodore Puongo, the mechanic responsible for maintenance of the vehicle at the centre of the argument. Other affidavits were by the second, third and fourth defendants who also gave oral evidence and were subject to cross-examination.

FACTS

The contract of employment

9. The company engaged the plaintiff as a concreter in June 1999. They entered into a written contract called a ‘non-executive staff service contract’. The plaintiff was later promoted to be a carpenter, the position he held when he was sacked.

10. The contract was four pages in length and consisted of 12 clauses, covering the following subjects:

1 nature of employment;

2 date of commencement (15 June 1999, and the contract “shall continue until termination”);

3 probation;

4 termination;

5 repatriation;

6 duties;

7 wages;

8 accommodation;

9 leave fares;

10 annual leave;

11 medical;

12 compliance with company regulations.

11. Clauses 4 and 12 are most relevant.

12....