11. Remuneration to John and Regina shall be:
A salary of $2000 per month to John Yates
Salary of $1000 per month to Regina.
In addition Regina shall receive a commission of 5% over $20,000 P.M. gross of billings for client that she introduces payable on
receipt from clients. The company vehicle (van) shall be primarily used for business purposes but John Yates may allocate its use
to any employee when not being used.
While waiting for work permits John and Regina shall receive a cash advance to assist in moving, airfares, relocation etc. which shall
be a maximum of F$6000. This shall be paid as follows:
$2000 at this date and $2000 on 1st August only if work permits have not been issued. A further $2000 on 1st September if work permits
have not been issued. As a security John has left two lenses listed as follows:
1. 300 m.m. Zenzanon o.
2. 5.7 m.m. Angenieus No.
Repayment of such an advance shall be over a 6 month period and upon completion the security shall be released.
12. Ravindra Patel shall provide the capital for the acquisition of equipment and the running costs of the unit. John Yates shall
provide equipment as specified in schedule A attached and these items shall be used within the unit but shall remain the property
of John Yates. In return for this facility John Yates shall receive 15% of any profit from the operation of the unit. If a separate
company is formed and shares issued then John and Regina shall receive 15% of the shares and the equipment shall become the property
of the company.
Items on schedule ‘b’ attached (16m.m.) Shall be stored on the units premises and if used shall be subject to a separate hire arrangement).
Agreed this day ..28/6/90...........................Signed Ravindra Patel
................Signed John Yates”
Around the same time Mr Yates drafted an organisation plan which embodied his suggestions on the establishment of the video production
unit. The Judge held that SPRL did not agree to all the suggestions. Those to which it did agree were incorporated in the 28 June
1990 document.
Mr and Mrs Yates and their two children transferred themselves and their belongings from the Solomon Islands to Fiji. They arrived
in October 1990 and commenced working for SPRL. A similar letter to that of 22 June 1990 had been written by Mr Patel on 2 August
1990 to Mrs Yates offering her work as a script writer for videos and film production over a 3 year period at a salary of $12,000
per annum. This letter was written for the benefit of and tendered to the Immigration service. In due course work permits were issued
for 2 years for both Mr and Mrs Yates.
After their arrival, preparations began to establish a video production unit, using some of the equipment which the Yates had brought
with them. New equipment was also purchased. SPRL advanced the costs of removal which was eventually paid back. Sadly, as the Judge
noted, the original expectations of the parties were not realised. There was only one other such unit in Fiji making television commercials
and the like; the expected work did not materialise. The Court can take judicial notice of the fact that the television and associated
industries were then only in their infancy in Fiji.
The Judge found that, by June/July 1991 Mr Patel was making petty demands of the Yates who were responding by largely ignoring these
demands. They set up a company for video production which they were to utilise in the then likely event that their relationship with
SPRL would be terminated. The Judge did not consider this action a breach of their contract of employment but rather “as an exercise
in self-preservation.”. He rejected suggestions of incompetence on the part of Mr Yates, pointing out that Mr Patel had over-estimated
the demand for a video unit in Fiji.
The Judge held that the document of 28th June 1995 defined the terms of the contract between parties. He found that the Yates were
to come to Fiji and work for a trial period of six months, or longer if agreed. If the arrangement prospered to mutual expectation,
the parties would then enter into a separate venture either by way of partnership or a separate company. Thereafter the partnership
or company would operate the video production unit and the Yates would cease to be employees of SPRL.
The Judge came to this view (quoted above) on the oral evidence and on his interpretation of clauses 3, 8 and 11 of the document.
He considered that SPRL’s letter addressed to Mr Yates and given to the Immigration Department was designed for immigration (work
permit) purposes so as to “underline” Exhibit 2. He did not accept this letter overrode the other document. The Judge stated that
plaintiff had himself confirmed this.
With respect to the learned Judge, we cannot see how a document written six days before would “underline” a later document. When Mr
Yates in evidence referred to the ‘contract’, he must have been referring to the oral contract with Mr Patel made after his arrival
in Fiji. The significant portion was then enshrined in the letter addressed to Mr Yates and given to the Immigration Department.
The Judge’s finding that the there was a contract of employment for at least 6 months, terminable by the formation of a new venture,
depended on continuing good relations between the parties and the future success of the operation. As neither of these two things
occurred, the Judge then should have addressed the question of what was the duration of the contract without the joint venture possibility
and what constituted reasonable notice by which either party could terminate that contract since summary dismissal was not justified.
The Judge considered Mr Patel’s arguments in favour of summary dismissal most unconvincing, describing some of his actions as petty.
The Judge held that “the employment relationship” was “a working trial” with an element of joint enterprise beyond that trial period.
He further held that “There was a degree of self responsibility and autonomy, notably in the areas of client promotion, profit sharing
and equipment use which, to my mind indicates that the agreement was rather than a contract of service, a contract to provide services
for which the parties were paid monthly and could be terminated on a month’s notice with the added provision of entering into joint
enterprise if successful.”
This statement that there was a “contract for services” rather than a contract of service is at odds with the finding of the Judge
on the whole of the evidence, that the Yates were entitled to succeed on the grounds of their wrong dismissal from contracts of service.
We unhesitatingly consider the Judge was right to find contracts of service between SPRL and the Yates. We cannot see how they could
be called ‘contracts for services’.
Although counsel referred us to several passages in the evidence and the documents, we cannot find anything to justify the Judge’s
finding that the employment contracts were terminable on one month’s notice. This is a case where this Court is in as good a position
as the trial Judge to draw inferences from proved facts and from the documents. In our view, the letter of 22 June 1990, written
to the Immigration Department by Mr Patel, must be taken as recording the previously consummated oral agreement between the parties.
It contained the essential items relating to the employment of Mr Yates, i.e. his duties, the term of his engagement and his salary.
SPRL cannot be heard now to say differently. SPRL is in the same situation as that discussed by the Privy Council in Chettiar v. Chettiar [1962] 1 All ER 494. In that case, one party who had made certain representations about a transaction to a public authority, was held not able to resile
from that statement. The letter of 22 June 1990 indicates that the work to be done by Mr Yates as Producer/ Director was to extend
over a 3 year period. The detailed contract of 28 June 1990 referred to a 6 months’ trial period, after which the contract would
be open for discussion and possible revision. But there was nothing in the document to indicate that the contract would come to an
end if there were no discussion.
Looking at the evidence as a whole, we find that there were oral contracts between the Yates and SPRL for them to work for a maximum
of 3 years, subject to the issue of work permits. These were issued for two years only, though the witnesses seemed optimistic that,
had all gone well, extension could readily be obtained. The contracts were for a minimum period of 6 months; thereafter they became
terminable on reasonable notice. The Judge’s apparent basis for finding only a monthly contract, from the fact that the salary was
paid monthly, is a very weak indicator, overtaken by the other facts viewed as a whole.
In endeavouring to decide on what would be a reasonable period of notice, we take into account the Yates’ specialised occupations,
the newness of the television industry in Fiji at the time and the slim chances of the Yates’ finding similar specialised employment
in Fiji. We do not overlook the fact that, when the Yates saw that the relationship was about to implode, they set up their own small
company. We agree with the Judge that, had things gone well between the parties, there would have been no necessity for them to have
taken that step.
In all the circumstances, we consider a period of 6 months’ notice appropriate in for both Mr and Mrs Yates. We observe that Mr Patel’s
letter of 22nd June 1990 was not addressed to Mrs Yates. Her similar letter was dated 2nd August 1990. But there was evidence that
both Mr and Mrs Yates regarded their employment as a joint venture for the sake of which it was considered worthwhile to remove themselves
and their family to another country where they could utilise their skills in specialist areas.
Counsel should now be able to work out the damages due, subtracting for the period of notice which we have found appropriate, the
earnings during that period from the Yates’ company.
The Judge awarded holiday pay to both Mr and Mrs Yates. There was nothing in the contract regarding holiday pay; therefore the general
legislation which provides for 10 paid days holiday per annum must apply. The Judge was in error in awarding holiday pay on any other
basis. Sick pay is also covered by the legislation and should also be taken into account in the calculation. If the parties cannot
agree then the Registrar is empowered to decide the quantum in accordance with the principles set out in this judgment.
SPRL and Mrs Yates had liabilities under the Fiji National Provident Fund legislation. An employee under the age of 55 has to pay
7% of his or her salary to the Fund; the employer deducts this from the salary and adds another 7% as the employer’s contribution.
Those contributions are then sent to the Fund. Mr Yates was over the age of 55 at the relevant time and therefore was not obliged
to contribute. The Judge said that “ FNPF contributions were not envisaged nor thought appropriate as supported by the initial claims
lodged in open correspondence.” There is nothing in the statement of claim about the FNPF contributions for Mrs Yates. Because the
contributions became an issue at trial, we think the appropriate order is that the SPLR should deduct 7% from the total amount of
salary paid to Mrs Yates both under this judgment and before her dismissal. It should pay this deduction to the Fund plus another
7%, being the employer’s contribution.
Accordingly the appeal by the Yates is allowed and the judgment is to be varied as indicated. We deal now with SPRL’s appeal.
The Judge ordered interest on the damages awarded at the commercial rate of 13.5% per annum. He did so on the basis that the parties
had indulged in a commercial venture which justified an award of interest at commercial rates. He ordered the interest to be paid
from 3 August, 1997 the date of the unjustified termination.
In our view, this was not an appropriate case for the imposition of a commercial rate of interest. There was just no evidence of particular
loss. An example of such evidence might have been that the Yates had to go into overdraft, once they had lost their employment with
SPRL.
Those cases where commercial rates are paid, are usually where the successful party has had to borrow money because it should have
been paid by the unsuccessful party. There was no evidence before the Judge of any particular hardship on the part of the Yates.
Counsel agreed that the relevant commercial rate was 13.5% but that savings or deposit account interest was about 6%. Counsel referred
to cases where interest of 9% was paid in death claims by dependent relevants [sic]. In the circumstances, we think that an appropriate
rate of interest, generous to the Yates, is 9% . SPRL’s appeal is allowed accordingly and the judgment varied.
On the question of costs, the Judge’s award to the Yates of solicitor-and-client costs appeared to be for the following reasons:
(a) SPRL was seen as “an intransigent opponent”,
(b) there had been some suggestion of mediation by a third party which had been rejected by Mr Patel for SPRL and
(c) an open letter dated 2 September 1992 from the Yates’ then solicitors to SPRL’s solicitors offered to settle the case for $6,500
to obviate a trial. This letter received no reply despite reminder letters up until 23 February 1993.
The general rule is that the costs are in the discretion of the trial Judge. An appellate Court is unwilling to interfere unless the
discretion has been exercised on a wrong principle. The scale under Appendix 4 of the High Court Rules, normally the basis for an
award, is exceptionally modest; it cannot be taken as allowing more than a token contribution to a successful party’s reasonably
incurred expenses. O.1 r 9 (3) (a) allows a Judge to make a special order in any proceedings, but the discretion is restricted by
O.1 r. 9 (3) (b) and the detailed considerations set out in that sub-rule. However, O.62 r. 9 (4) (b) entitles a Judge to award a
gross sum in lieu of taxed costs.
An award of solicitor-and-client costs in a Fiji context is unusual. Some assistance may be gained from New Zealand practice because
there is in that jurisdiction a scale of costs attached to the Rules which is meant to apply in the ordinary run of cases. In practice
in recent years the scale is often by-passed by Judges, particularly in commercial cases in both the High Court and Court of Appeal.
Both Courts are tending more and more to award a lump sum to represent a reasonable contribution to the costs of the successful party.
That figure can be higher than usual where the conduct of the unsuccessful party has been unreasonable.
Reading the record we think the Judge was right to consider the conduct of Mr Patel of SPRL to have been unreasonable. The Yates’
perfectly sensible and reasonable offer of settlement did not receive from him either the courtesy of a reply or a counter proposal.
It should be borne in mind that in today’s situation, where time means money, the taxation of costs is a cumbersome, time consuming
and costly procedure for both practitioners and officers of the Court. Taxation of costs in New Zealand has become very rare because
of the broad approach to which we have referred. Orders which result in a taxation are rarely cost efficient bearing in mind the
potential for recourse to a Judge from a taxing officer’s decision.
It is now becoming common in New Zealand and England for a plaintiff to indicate by way of open letter (i.e. a letter which is not
marked ‘without prejudice’) to the defendant the amount for which the plaintiff would be prepared to settle. Such a device is the
equivalent of a defendant’s payment into Court. Such a letter is known as a Calderbank letter, after the case of Calderbank v. Calderbank [1976] Fam 93. There, the English Court of Appeal held that a letter from one party indicating an offer which the Court considered the other party
should have accepted led to the costs of the party writing the letter were recoverable from that other party from the date of the
letter until the date of judgment. Cairns, L.J. noted that protection should be afforded to a party who wants to make a compromise
where ‘payment in’ is not an appropriate vehicle. Cairns L.J. referred to similar practices in land compensation and admiralty cases.
He saw no reason why the practice should not be adopted in matrimonial proceedings. The practice of Calderbank letters has now been adopted in New Zealand in respect of most classes of litigation. We see no reason why the Calderbank approach is not appropriate for Fiji. It is no answer to say, as did Mr Patel counsel for SPRL, that a litigant is entitled to his
or her day in Court. That must be so but the litigant should not, in order to have his or her day in Court, adopt a totally unreasonable
attitude about settlement out of Court. If he or she wishes to be unreasonable, then that is no justification why the other party
should pay for that unreasonableness.
A most useful discussion of costs was given by Hardie Boys J in Morton v. Douglas Homes Ltd (No.2) [1984] 2 NZLR 620. The learned Judge described the New Zealand scale (a similar device to the Fiji scale) as a legislative direction as to what was
to be regarded as a reasonable contribution to the costs of a successful litigant. If, in a particular case, compliance with that
direction would not achieve the purpose of an award of costs (i.e. to impose on an unsuccessful party the obligation to make a reasonable
contribution to the reasonable and proper costs of a successful party) then the Court can make an appropriate order to achieve that
end. Matters to be taken into account include the length of the trial, the amount of preparation, and the amount of solicitor-and-client
costs actually incurred. A Court is not obliged to make the unsuccessful party pay for the opponent’s desire for “Rolls Royce” representation.
We agree with the learned Judge that this case called for a payment of party and party costs well in excess of the scale. It was not
a case which called for solicitor- and-client costs such as Commissioner of Inland Revenue v. Inglis [1993] 2 NZLR 29, 35. The intransigence of the defendant in the face of a reasonable offer of compromise clearly justifies that approach. We think
that the jurisdiction under O. 62 r. 9 (4) (a) should have been invoked by the Judge. Acting under that Rule, we order SPRL to pay
$2,500 costs plus disbursements to the Yates for the High Court trial.
In this Court the Yates have succeeded on the main issue but SPRL has succeeded partially on the questions of interest, costs and
holiday pay. We therefore award the Yates $1000 costs plus disbursements on their appeal. We make no order as to costs on SPRL’S
appeal.
Sir Ian Barker
Judge of Appeal
Mr Justice I. Thompson
Judge of Appeal
Mr Justice R. Savage
Judge of Appeal
Abu0039u.96s
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