Cameron v Mainline, Brown & Doherty Contractors Ltd [1979] CKHC 2 (1 June 1979)

IN THE HIGH COURT OF THE COOK ISLANDS
HELD AT RAROTONGA

BETWEEN

JOHN CAMERON
of Rarotonga, Carpenter
PLAINTIFF

AND

MAINLINE, BROWN &
DOHERTY CONTRACTORS LIMITED,
a duly incorporated company
carrying on business in the Cook Islands
being registered under Part 12 of the Companies Act 1970
DEFENDANT

Counsel: Tylor for the Plaintiff.
McDonnell for the defendant.

Dates of Hearing: 12, 13, 14.2.79
Submissions received: 22.3.79; 9,17.4.79; 3.5.79; 1.6.79.

JUDGMENT OF DONNE CJ

This is a claim of $7,588.12 by way of damages for the alleged wrongful dismissal of the plaintiff by the defendant. The defendant counterclaims for $684.15 for rental paid for the house provided by for the plaintiff occupied by him after the termination of his employment and for loss of rental value it suffered by reason of the plaintiff’s occupation. At the conclusion of the hearing I gave leave for written submissions to be made. The last of this were received on the 1st June 1979.

It was established on the evidence that the plaintiff who had been employed by the defendant company in Auckland, New Zealand was appointed to work for the company at Rarotonga. He took up his position there in January 1977. He brought with him his de facto wife and her family and ultimately moved into a house provided by the defendant at Arorangi. In March 1977 he was formally appointed Construction Manager with eventual promotion to Projects Manager for the defendant. The terms of appointment are embodied in a letter written on behalf of the defendant dated the 22^nd March 1977 reading as follows:-

"Mr J. Cameron

C/o Mainline-Brown & Doherty

Contractors Ltd.

RAROTONGA

22^nd March 1977.

Dear John,

This letter is to confirm your position on our work in Rarotonga as Construction Manager with the eventual rise in position to Projects Manager, once Mr Doherty leaves, providing your work as Construction Manager is satisfactory.

The terms of employment are:-

A) Resident in Rarotonga.

B) Free House and Power.

C) Return Air Fares paid to N.Z. and back to Rarotonga every 12 months.

D) Initial period of Contract 2 years.

E) Salary $11,500.00 with N.Z. $3,000.00 overseas allowance.

Yours faithfully,

MAINLINE-BROWN & CONTRACTORS LTD

D. Brown

Director"

The Plaintiff continued as Construction Manager until October 1977 being engaged on the defendant’s Rarotongan Hotel Contract. In that month Mr Doherty, a director of the Defendant who had been Projects Manager for the Company in Rarotonga returned to New Zealand and the defendant having been satisfactory as a Construction Manager, was appointed Projects Manager in his place. At the time the plaintiff took over his new post, the defendant had three projects under construction, the hotel, certain pipe lying and five houses for the Ministry of Works. Later additional projects included a dwelling house for Dr. Davis and an Amenities Block for the New Zealand Government.

At the time the plaintiff became Projects Manager I conclude there were no major problems in relation to the Projects in hand. The evidence does not suggest any. It is not disputed, however, that within a very short space of time thereafter, the project were beset with many difficulties the result of poor workmanships, inadequate supervision and bad employer and employee relationships. In the result Mr Bell, Manager of the defendant company, and two directors Mr Brown and Mr Doherty at various times visited Rarotonga to consider these problems. While the plaintiff contended that the first two men had said they were satisfied with his work the evidence does not support this view. It would appear inconsistent with dissatisfaction for Mr Brown to grant the plaintiff an expense allowance but I accept his explanation that it was for the purpose of the plaintiff, as the defendant’s Manager in Rarotonga to entertain the customers and to maintain the goodwill of persons from whom the defendants sought business and assistance. Mr Brown with justification reprimanded the plaintiff for his failure to prepare properly the site for Stage II of the Rarotongan hotel. This was the responsibility of the plaintiff and not as he contended that of the architect. In consequence, this work was organised by Mr Brown who also expressed his dissatisfaction with the work on Dr Davis’ house which was considered by him to be one of the "worst disasters" resulting in financial loss to the defendant. Both Mr Brown and Mr Bell were concerned with the plaintiff’s bad relationship with the staff and spoke, the latter somewhat forcefully, to him about it.

I have no doubt that after the visits of both Mr Brown and Mr Bell early in 1978, the plaintiff was under the no illusion about his position with the defendant. He had received reprimands and complaints which could not allow him to assume the defendant was happy about his ability as Project Manager. In April 1978 Mr Doherty came to Rarotonga. He said he did so because of reports of conflict and disharmony in the workforce. After his arrival he embarked a full survey of the defendant’s projects and was dissatisfied with what he saw. He said the organisation of the work was poor and production slow. He considered there was no stability in the work team who were moved about without any proper regard for their utilisation. He found that the pipeline project with the Marsters was not proceeding smoothly and considered that was due to the plaintiff’s inability to organise supplies and transport. He also considered the plaintiff responsible for the ordering the wrong excavator for the defendant’s J.C.V. Digger which had been damaged, such error costing the defendant approximately $3,500. His inspection of the Ministry of Works houses and the Amenities Block revealed serious constructional mistakes to which reference will later be made. Doherty told the plaintiff of his dissatisfaction with his work and at that stage the plaintiff admitted he was unable to cope with the job. On consideration of the overall position a few days later, Mr Doherty communicated with his co-director Mr. Brown in Auckland and it was decided to terminate the plaintiff’s employment. On the 1^st May 1978 notice of dismissal was handed to the plaintiff by Mr Doherty. It reads as follows:

"P.O. Box 139

Rarotonga

Cook Islands

1 May 1978

Mr J. Cameron

Arorangi

RAROTONGA

Dear John,

This letter is to serve as notice to you from this company in Rarotonga, and to take full effect within two months of this date.

I wished to point out that this decision is made in the light of current contracts and our work programme, and what can be envisaged in the near future. It is desired to place on record our appreciation for the good job you did on Stage II of the Hotel contract. We have found that you are well suited to controlling one job, but have real problems when several jobs are involved and the organisation becomes fragmented.

Will you please tidy up your affairs in Rarotonga to enable an early return to N.Z. where you will serve out the rest of you time with the company there.

On behalf of the company I wish you every success in the future.

Yours sincerely,

W.C. Doherty

Director

Mainline-Brown and Doherty Contractors."

It was suggested by Doherty that they discuss the matter later at the Rarotongan Hotel which they did. He suggested the plaintiff may prefer to resign since a resignation would be better for his future rather than a dismissal. On the following day the plaintiff handed to Doherty the following letter:-

"John I. Cameron

P.O. Box 139

Rarotonga

Cook Islands

1^st May.

The Joint Directors,

Mainline-Brown & Doherty

Dear Sirs,

On receipt of my letter of service of notice, it was suggested that I tender my resignation as Project Manager.

I wish to point out that I would still like to work for the company on Rarotonga, because of the homework done on several forthcoming contracts and the renewed interest shown in the company’s future projects.

It is my honest feeling that the company image is now in high regard on the Island and that by me continuing here I can offer the company a service and a future on Rarotonga.

If the company wishes my return I would need more than the two weeks indicated for the following reasons:

We have accommodation of one month’s notice in Auckland to give to our tenants.

Sale of my wife’s car.

I now resign.

I assure you of my best intention at all times.

Yours faithfully,

(John I Cameron)"

In evidence the plaintiff said he did not write in this letter "I now resign", the inference being that the words had been inserted by someone else. After close examination of the letter and the writing I had no doubt those words were in the letter handed to Mr Doherty and that they were the words of the plaintiff. The plaintiff was told that the defendant would accept his resignation so long as the terms of his dismissal applied which was that he returned to New Zealand and served with the defendant there until the period of two months had expired. It was agreed that he return by the 17^th May and that the defendant would pay the airfares for himself, his de facto wife and children together with the freight on their personal effects.

A few days later the plaintiff saw Mr Doherty requesting that his resignation be withdrawn. After discussion it was agreed between them that the plaintiff be allowed to withdraw the resignation provided he accepted the terms of his dismissal. The letter of resignation was then torn up to be resuscitated out of the wastepaper basket in the defendant’s office on the 10^th May after a discussion between Doherty and the plaintiff in which the latter said he did not wish to return to New Zealand. This prompted the following letter to be handed to the plaintiff:

"PO Box 139,

Rarotonga

Cook Islands

11 May 1978.

Mr J Cameron

Arorangi

RAROTONGA

Dear Mr Cameron,

I now confirm in writing the matters you and I discussed at 4.15 pm yesterday.

(a) This Company has booked airline tickets as near to the 17 May (there is no plane that day) as you asked. Now you request us to cancel these bookings, your reasons being:

(1) You are awaiting some stereo equipment;

(2) You believe two weeks notice to tidy up your affairs in Rarotonga insufficient time;

(3) You do not wish to return to NZ anyway;

(4) You also hope I will change my mind and find some position that you might be able to fulfil.

I find your reasons for wanting us to cancel your bookings inadequate, and thus stand by the original date of 16 May, which is the date as near as possible to 17 May 1978, requested by you.

(b) We will be advising the immigration office as required by them, the details of your notice and travel bookings arranged for you. This is mandatory for all expatriates. The provision of a bond or return ticket for Immigration purposes is a factor involved, and unless you are able to make other arrangements on your own behalf, we are bound to hold firm bookings for you.

(c) I now confirm in writing that after the 16 May 1976, there is no position available in the Company of Mainline-Brown & Doherty in Rarotonga. As previously discussed with you after your initial notice was given, you would serve out the remainder of your time with the Company in NZ.

(d) You should clearly understand, that if you do not leave Rarotonga on or before 16 May 1978, the house you are occupying being a Company residence, must be vacated by the above date.

(e) It will be taken to be understood by me, that if you do not return to NZ on 16 May 1978, to mean that you have resigned from the Company and will only collect your salary up to that date, and thus forfeit the final six weeks owing.

(f) I have already explained to you the reason for the serving of notice, i.e.

"Your work of controlling an individual job is good, but when it comes to controlling a fragmented organisation as we have now, you are out of your depth."

I do not wish to discuss the matter further, and await your immediate decision.

Yours faithfully,

W C Doherty

Director

Mainline-Brown & Doherty Contractors"

The plaintiff then consulted his solicitors who wrote the following letter in reply:

"16 May 1978

Messrs Mainline-Brown & Doherty

Contractors Limited

PO Box 139

RAROTONGA

Attention: Mr W G Doherty

Dear Sir,

We act for Mr John Cameron who has handed to us a letter dated 22 March 1977. This letter sets out the Contract of his employment in the Cook Islands.

Our client also has shown us your letter to him dated 1 May 1978, which letter purports to alter the original Contract.

We advise that our client does not accept this Notice and wishes to continue his contract. If your Company intends to breach his Contract of employment, we are instructed to claim against it for damages. Obviously, this action would not be taken if our client was allowed to finish the term of his Contract.

Would you please notify us of your decision as soon as possible.

Yours faithfully,

SHORT & TYLOR

Per:

(R W Tylor)"

The plaintiff ceased employment with the defendant on the 16^th May 1978 and has since remained in Rarotonga where he has obtained employment. He continued occupying the house at Arorangi until the 9^th December 1978. The evidence as to liability for and payment of rent by either party is obscure. The defendant was obligated under the tenancy agreement with the owner to rent the premises for one year from the 23^rd January 1978. Apparently, however, it was able to release itself from that obligation since it terminated the tenancy on the 12^th July 1978, pursuant to a right to terminate under the agreement.

The Claim

The defendant in its defence has contended that it properly dismissed the plaintiff because he failed to carry out his duties in a proper and satisfactory manner. The main contention is that proper supervision of the projects by the plaintiff would have avoided the constructional faults and bad staff relationships which were found to be existent by the three executives of the defendant company Messrs Doherty, Brown and Bell. The plaintiff, while admitting he was responsible for overall supervision, contends there were too many projects, eight in all, for him to closely supervise the building projects and he places the blame for the troubles on the foreman and those in charge of each job. As I see it from the evidence the post of Projects Manager is the Key one in the defendant’s organisation in Rarotonga. I accept the defendant’s contention that on him falls the responsibility for the overall control of all projects, general control of staff, and plant and machinery. He must regularly inspect each job and co-ordinate work and the use of staff and equipment to ensure an efficient running of the defendant’s undertaking. Having therefore decided the scope of the plaintiff’s duties, I now turn to an examination of the complaints against him to ascertain whether or not his dismissal was justified bearing in mind that the burden is on the defendant to establish it had a good cause to dismiss him.

Firstly, I consider the complaints of constructional faults on three projects, two relating to the houses being built for the Ministry of Transport and one to the Amenities Block:

1. The Ministry of Transport houses at Nikao. These were connected to a septic tank constructed approximately 3 feet too high. This required the resiting of the tank and further connections. This error was the result of gross negligence. The evidence establishes that this mistake was so obvious that a visual inspection would have discovered it. I consider that the plaintiff must bear the responsibility for negligence. The laying of a sewerage system was an important stage of this project. He should have regularly checked it and had his inspections and supervision been adequate he could have, in my view, forestalled this fault occurring.

2. The Ministry of Transport house at Kavera. Again, the glaringly poor workmanship resulting in ill fitting window trims, poorly finished walls, faulty floor levels and block work could have been averted earlier had proper supervisions been carried out. The evidence suggests that nothing was done about them until Mr Doherty discovered them.

3. Amenities Block. Here visual inspection would have discovered that the three toilet outlets were out of line and that concrete work generally was poor. Although this job was a subcontract, the control of it was still with the plaintiff. Nothing appears to have been done until the Doherty survey.

That these constructional faults were serious I have no doubt and that the defendant was justified in considering them as such. The plaintiff does not dispute this but as stated above he contends that as he had eight projects to control and supervise he was unable to give them the degree of supervision as would have been desirable but I find that difficult to accept. Rarotonga is a small island and the distances to travel are not great. He further complains that he did not have adequate support and backup facilities. I have considered Mr Murray’s evidence that the back-up facilities in his opinion were not sufficient. However, the plaintiff assumed the position of Projects Manager knowing what backup was available. At no stage did he complain to the defendant that he required further back-up staff. His letters and memoranda make no mention of this.

I conclude therefore that he did not at the time of his employment regard the matter in the same light as he now does.

However, it was not only in relation to these constructional problems that the defendant contends the plaintiff failed to perform his duties satisfactorily. It points to the troubles with the Marsters pipe laying contract, Dr Davis’ house and the ordering of the incorrect digger arm. I do not propose to traverse these matters at length save as to state that I am satisfied that the problems with Marsters and Davis were at the least exacerbated by the plaintiff’s inability to cope with his job as Projects Manager. As to the incorrect ordering of the digger arm, the plaintiff’s responsibility extended to ordering this equipment, he was in charge and it was the result of the plaintiff’s failure to supply proper particulars that cause the defendant the monetary loss of approximately $3,500.

I have considered these matters and others mentioned in evidence to which I find it unnecessary to refer and I reached the firm conclusion that the plaintiff was not satisfactory as a Projects Manager. He was not able to cope with the many requirements of the position and the defendant is correct in its observation to him that "when it comes to controlling a fragmented organisation as we have now, you are out of your depth."

Much argument has been addressed to me on the legal effect of the alleged resignation. I find it unnecessary to reach any conclusion thereon. I have held the plaintiff did resign and I refer to the resignation for one reason only. I consider his taking such a step allows the strongest inference to be drawn that he acknowledged he had carried out his job as Projects Manager in an unsatisfactory manner and that his dismissal was justified. Had he acknowledged that he wrote in the relevant letter the words "I now resign" instead of denying he had, he could have given his reasons for doing this. I conclude he had no other reason than that to which I have referred.

In the result I hold that the defendant was justified in dismissing the plaintiff in the terms it did and there must be judgment for the plaintiff in respect of the claim.

The Counterclaim

The evidence adduced to support this claim is unsatisfactory. While it was said in evidence that the defendant was paying rent after the plaintiff’s term of employment had ceased, no evidence of payment to or receipt by the landlord of any specific amount was adduced.

The defendant’s tenancy agreement with Mrs McQuarrie, which the plaintiff never saw and was not a party to, was for a term of one year with the right to terminate on one month’s notice. The defendant took no steps to terminate until June, the notice terminating expiring on the 12^th July 1978. It was contended that this was done to minimise the defendant’s loss. To do this, however, the notice could have been given on the 1^st May 1978 when the plaintiff received his notice if, as the defendant alleges, at that time the plaintiff agreed to vacate on the 16^th May. There is, of course, no notice in the letter of dismissal requiring the plaintiff to vacate the house. As to the value of the tenancy, I see no justification for contending in as far as the plaintiff is concerned the value should be other than that rental he agreed to pay to the defendant. However, I do not propose to traverse the matter further since I am satisfied the claim has not been adequately proven. There will be judgment for the plaintiff on the counterclaim.

Judgment

The claim was amended at the hearing by deleting a claim for $10,000 by way of general damages which could not be sustainable in an action for wrongful dismissal. The claim for loss of salary was also reduced. It was further reduced in final submissions. Counsel for the defendant in consenting to the amendments reserved the right to claim costs on the abandonment of the claim for special damages. Having considered what would have been involved as far as he was concerned up to the stage of this abandonment, I feel that the defendant will be adequately compensated in costs by the award which follows:

(a) There will be judgment for the defendant on the claim with costs based on the sum of $7,588.12 as finally claimed.

(b) There will be judgment for the plaintiff on the counterclaim with costs based on the sum of $684.15.

(c) The plaintiff will be ordered to pay witnesses expenses according to local scale.

SIR GAVEN DONNE
CHIEF JUSTICE

Solicitors for Plaintiff, Short and Tylor, Rarotonga
Solicitors for Defendant, Paul McDonnell, Rarotonga