Varea v Fiji Times Ltd [1998] FJHC 206; HBC0412.95 (4 November 1998)

IN THE HIGH COURT OF FIJI
(AT SUVA)
CIVIL JURISDICTION

ACTION NO. HBC0412 OF 1995

BETWEEN:

KAMOE RAURIKUE VAREA
of Suva, Stores Manager
Plaintiff

AND

FIJI TIMES LIMITED
a duly incorporated Company having its
registered office at Suva
Defendant

S. Sharma for the Plaintiff
M. Young for the Defendant

Dates of Hearing and
Submissions - 4th, 5th, 19th May, 4th June 1998
Date of Judgment - 4th November 1998

JUDGMENT

The world of business can be stern and unforgiving. The present case is an example of that.

Until his employment was terminated by the Defendant on 31st March 1995, the Plaintiff had been employed by the Defendant for over 18 years, first as a Clerk and then by various promotions until in December 1989 he was appointed Manager of the Lautoka Office of the Defendant. He was transferred to Suva in August 1993 to takeover the running of the Fiji Sixes Department, a competition run by the Defendant, his duty being to try to reduce the expenses of running the competition which was of some concern to management.

For the first two months of this assignment however the Plaintiff was directed to work in its Stores Department observing how that Department worked and to recommend any changes which he thought necessary.

As a result of his observations in that Department the Plaintiff prepared a report for the Company in which he commented on a lack of communication which he found to exist at the time between the Department and Senior Management.

Following this the Plaintiff, who was considered to show Senior Management potential, was made a trainee attached to all departments of the Defendant with a view of obtaining a broad view of the Defendant's operations.

On the 18th of October 1994 the Plaintiff was appointed Acting Manager of the Stores Department, it being the view of Senior Management of the Defendant that the Stores Department required a strong Manager to lead it and that the Plaintiff had the necessary ability to do so.

He appears to have given satisfaction in his new position but unfortunately for him on the 2nd of December 1994 a serious incident occurred involving damage to at least 25 reels of newsprint which were stored in a shed at Walu Bay and rented by the Defendant from Carpenters Fiji Limited.

On that date there was some heavy rain in Suva which flooded part of the shed at Walu Bay causing damage to the newsprint, the full extent of which was not appreciated until later.

The Defendant held the Plaintiff responsible for first not investigating the damage as soon as he was notified of it at about 4.30 p.m. on the day of the flood and secondly for doing nothing to minimise the damage to the newsprint. As a result of this on 31st March 1995 by letter of that date the Defendant terminated the Plaintiff's employment and allegedly wrongfully dismissed him. He now claims damages for wrongful dismissal amounting to nearly $498,000.00.

The Defendant denies liability on the ground that in failing to attend promptly to the damage to the newsprint on the 2nd of December 1994 the Plaintiff committed a fundamental breach of his contract of employment and thus entitled the Defendant to dismiss him. In addition the Defendant counter-claims the sum of $7,457.11 being the balance of a personal loan obtained by the Plaintiff from the Defendant for the purpose of buying furniture and other household goods following his transfer from Lautoka to Suva.

Both parties gave sworn evidence, the Plaintiff being the only witness in his own cause while the Defendant called two witnesses, William Simpson the Production Manager and Ubendra Rao the Financial Controller of the Fiji Times and the Company Secretary.

I shall now summarise that evidence. The Plaintiff stated that he is now aged 42, married with 6 children ranging from the eldest 16 years old to the youngest 8 and has been unemployed ever since his dismissal. When he was appointed to the position of Acting Manager Stores he was given a Job Description containing a list of 26 duties which he was required to perform of which the following are relevant to the issues here:

(1) Also ensure the Company is not over-stocked. Issue the old stock first. Confirm quality with Mr. Simpson before issuing.

(2) Any discrepancies or damages must be brought to Accounts attention immediately.

(3) Ensure staff conduct their duties effectively and safely.

He said that he understood the Job Description and discharged his responsibilities exactly according to that description. During his 18 years of service with the Defendant he had never received any complaint about his work nor had he been disciplined in any way by the Defendant. He said that at about 4.30 p.m. on the 2nd of December he received a message by telephone from one of the Defendant's employees at Walu Bay that the bulk store was flooded and the newsprint was getting wet. The Plaintiff then spoke to a Mr. Naushad Ali the Purchasing and Insurance Clerk of the Defendant and asked him to speak to Mr. Ubendra Rao. At the time the Plaintiff was very busy arranging the transfer of stock from the Stores to the Commercial Production Department of the Defendant which worked at the time only at weekends. He said that if he failed to do this the Commercial Department would not have been able to work during the weekend and consequently the Plaintiff believed he would have been sacked if he had failed to concentrate on that task. Because he knew that Carpenters closed at 5.00 p.m. he thought it was too late to do anything more about the newsprint which was left in the store for the whole of the weekend. On the following Monday the 5th of December the Plaintiff told an employee working in the Stores Department to go to the shed at Walu Bay with Naushad Ali where they were to put aside the newsprint said to be affected for the purpose of having an insurance inspection and this was done.

The Plaintiff said that that was the end of his involvement in the matter and that as far as he was concerned the incident was not mentioned again until the 29th of March 1995 when the Plaintiff and other employees of the Stores Department attended a meeting with Mr. Simpson and Mr. Rao following which, as I have said earlier, the Plaintiff was dismissed.

The Plaintiff concluded his evidence-in-chief by giving evidence about the meeting on the 29th of March 1995. He stated that Mr. Ubendra Rao and Mr. Simpson said they were concerned about the damage to the newsprint and he, the then Manager of Stores, Mr. Kanhaiya Lal and Naushad Ali were all asked who had authorised the transfer of the wet newsprint to the Fiji Times factory. He said that Mr. Rao and Mr. Simpson were very critical of both the Plaintiff, Ali and Lal. After a few minutes Naushad Ali was asked to leave the meeting when Kanhaiya Lal and the Plaintiff were accused of serious inefficiencies. Mr. Lal was then excused from further attendance leaving the Plaintiff with Mr. Rao and Mr. Simpson who accused him of not performing his work properly and of causing the Defendant to lose thousands of dollars because of wet newsprint. The Plaintiff was then asked to resign immediately or be dismissed and was given until the afternoon to hand in his resignation.

At 3.00 p.m. the Plaintiff met the Managing Director of the Company and tried to explain to him what had happened at the earlier meeting. The Managing Director then called in Ubendra Rao and both then accused the Plaintiff of gross inefficiency in not minimising the damage to the newsprint.

The Plaintiff declined the invitation to resign and was then dismissed.

The Plaintiff said that at that meeting there was no discussion about his Job Description and that he still does not know why he was dismissed. The above is a summary of his evidence-in-chief.

He qualified this evidence in important respects in my view in his cross-examination. There he agreed that Naushad Ali was not responsible for the safety and security of the newsprint reels in the store and conceded that he was not in the vicinity of Ali when Ali allegedly informed Mr. Rao of the flooding. He simply said "I presume he informed Rao".

The Plaintiff also admitted that he subsequently released 20 reels of the 25 damaged reels to the Production Department for use without advising the Production Department and/or Rao. In this respect I am satisfied that the Plaintiff committed a breach of Job Description (1) supra. The Plaintiff admitted that 20 of the 25 reels were later used by the Defendant despite instructions from Ubendra Rao which I am satisfied the Plaintiff received to keep the 25 reels aside for insurance purposes.

In his evidence William Simpson stated that he had been employed by the Defendant for 33 years and was now its Production Manager. He first discovered the damaged newsprint in March 1995 when a number of reels were transferred from the Walu Bay Store to the Production Department. When walking past the stack of reels he noticed that the bottom of the stack was wet. He then stripped the cover from the stack and discovered that a few reels were wet. He then called in the Store's Purchasing Department and the Accountant Mr. Rao and asked them if they could explain why the reels were wet.

As such they were unsuitable for production. He then called for an urgent meeting which was held on the 29th of March and said that the Plaintiff there admitted that he was responsible, which the Plaintiff had denied in his evidence. He did not give any explanation why the damaged reels had not been reported. He said he was very upset because he had received notes from the Managing Director wanting an explanation of why spoils, that is unusable newsprint, were so high resulting in a number of unsaleable copies of the Fiji Times.

Mr. Simpson said that when the Plaintiff discovered the damage he should have immediately reported it to Ubendra Rao, Naushad Ali and himself - to Ubendra Rao because the Plaintiff was under him, to Naushad Ali because he was the Purchasing Officer and responsible for insurance claims and to Mr. Simpson because the Production Department was the end-user of the newsprint and because Mr. Simpson would have been best able to assess the damage. He believed the Plaintiff would have known this because of previous problems when he came directly to Mr. Simpson to report damage. He said newsprint was the most important item in the Defendant's stores because without it there would be no newspaper. He said the Plaintiff should have realised that, based on his experience with the Company, there was no stock more important than newsprint and that commercial printing could be stopped when necessary whereas the newspaper production run was vital.

He said that if the Plaintiff had acted immediately on being notified of the damage the Defendant's loss would probably have been minimised or certainly reduced.

The final witness was Ubendra Rao. Mr. Rao said that Managers of the various departments of the Company were given job descriptions only as a guide but that they were also told in great detail their responsibilities so that they could see a bigger picture of the organisation and their relations with all other departments in it. He said that the Fiji Times has been generally blessed with good Managers and its success as a Company proved this.

He said that he was convinced the Plaintiff was the right person to manage the Stores Department which needed somebody senior and well trained to resolve the problems it had been having. The Plaintiff had himself recognised one of the problems in his report, namely lack of accountability by the then Manager of the Department.

Mr. Rao said he first heard of the flood and damage on the 2nd of December on one of his regular visits to the stores on the 5th of December 1994. When the Plaintiff told him of the flood during their conversation Mr. Rao said he was very upset to hear this because it was yet another case of non-accountability. He was particularly angry because the Plaintiff knew of the problem the Defendant had had with its Stores Department of not being kept informed of any major problems in the Department. He was also very annoyed that whoever made the decision not to inform him on the Friday had assumed that the rain would stop on Friday and in so doing had exposed the Company to potential damage. The result was that the Company had been left at the mercy of the weather over the weekend.

Because the Plaintiff had then released 20 of the damaged reels for use without advising the Production Department or Mr. Rao the Defendant was not able to substantiate its insurance claim for these 20 reels because they had been used.

Mr. Rao said that towards the end of March 1995 Mr. Simpson had complained very bitterly to him about the poor quality of paper he was getting. Normal spoils were at the rate of 5% to 6% but this had increased to 8% which was a major concern to Head Office because it meant that the Head Office in Australia would thus consider the operation in Fiji was inefficient which reflected on management. He also said that at the meeting on the 29th of March 1995 the Plaintiff admitted that he was responsible. Mr. Rao said that Mr. Simpson and he had credited the Plaintiff for admitting his fault but because of the extent of the problem he had helped cause it was totally unacceptable to the Company. The Plaintiff was therefore given the opportunity to resign.

Mr. Rao stated that each newsprint reel costs $500.00, with which the Plaintiff agreed. Mr. Rao said that obviously on the Friday afternoon the Plaintiff had "got his priorities wrong".

If either Mr. Rao or Mr. Simpson had been informed immediately of the problem they would have arranged with Carpenters to keep the store open so that the damaged reels could be moved.

The evidence satisfies me:

(1) that the Plaintiff failed to appreciate the urgency to act on Friday 2nd December 1994 and over the weekend;

(2) failed to appreciate the possible consequences of failing to act immediately and over the weekend;

(3) failed to appreciate that his position as Manager Stores required him to do more than direct Ali to advise Rao of the flooding. Further Ali was not in the Plaintiff's Department and was not responsible for the security and safety of the stock;

(4) failed to appreciate the actions necessary on being advised of the flood or, as Ubendra Rao put it in his evidence, he failed to see a "bigger picture".

(5) Contrary to his evidence I believe the Plaintiff knew why he was dismissed.

I am satisfied that at the meeting on the 29th of March the Plaintiff admitted his responsibility for the damage. I was impressed by the manner in which Mr. Rao gave his evidence. I formed the impression that he was a very efficient but fair Manager who had the right in his position to expect efficiency from his subordinate staff but particularly his Departmental Managers. I am satisfied that the Plaintiff failed in this regard. The question now is whether such failure warranted his dismissal. This requires a consideration of some of the case law on the subject of wrongful dismissal.

I begin with the observation that summary dismissal is a strong measure justified only in exceptional circumstances. The test to be applied in determining whether a dismissal is justified must vary with the nature of the business and the position held by the employee. There are many old cases on the subject. As to these in Wilson v. Racher (1974) ICR 428 quoted by Smith & Wood in their Industrial Law, 4th Edition 1989 at p.212 Edmund Davies LJ said:

"Reported decisions provide useful, but only general guides, each case turning upon its own facts. Many of the decisions which are customarily cited in these cases date from the last century and may be wholly out of accord with the current social conditions. What would today be regarded as almost an attitude of Czar-serf, which is to be found in some of the older cases where a dismissed employee failed to recover damages would, I venture to think, be decided differently today."

In Harmer v. Cornelius [1858] EngR 939; (1858) 5 C.B.N.S. 236 at 246 Willes J. stated:

"When a skilled labourer, artizan, or artist is employed, there is on his part an implied warranty that he is of skill reasonably competent to the task he undertakes. Thus, if an apothecary, a watch-maker, or an attorney be employed for reward, they each impliedly undertake to possess and exercise reasonable skill in their several arts.... An express promise or express representation in the particular case is not necessary."

To my knowledge that proposition of law has never since been questioned.

In Laws v. London Chronicle Ltd (1959) 1 WLR 698 at 700 Lord Evershed M.R. said:

"The question must be - if summary dismissal is claimed to be justifiable - whether the conduct complained of is such as to show the servant to have disregarded the essential conditions of the contract of service."

Later Lord Evershed quoted from the judgment of the Privy Council delivered by Lord James of Hereford in Clouston & Co. Ltd. v. Corry [1905] UKLawRpAC 66; (1906) A.C. 122, 129 where Lord James said:

"Now the sufficiency of the justification depended upon the extent of misconduct. There is no fixed rule of law defining the degree of misconduct which will justify dismissal. Of course there may be misconduct in a servant which will not justify the determination of the contract of service by one of the parties to it against the will of the other. On the other hand, misconduct inconsistent with the fulfilment of the express or implied conditions of service will justify dismissal."

Basing myself on these statements of law I have come to the conclusion that the Defendant was justified in terminating the Plaintiff's employment. The Plaintiff held a very responsible position with the Defendant and because of his eighteen years' experience with the Company I am of the opinion that he should have realised the absolute importance of informing either Mr. Rao or Mr. Simpson immediately so that remedial measures could be taken to at least minimise the loss. In my opinion the Plaintiff committed a serious error of judgment in giving priority to the Commercial Printing Section when the first priority with any newspaper must be, as I would have thought most reasonable people would recognise, the production of the Company's newspaper. He made a costly mistake but as I said at the beginning of the judgment the world of business can be very demanding and when serious mistakes are made equally unforgiving.

For these reasons I dismiss the Plaintiff's claim and grant the Defendant's counter-claim in the sum of $7,457.00. The Plaintiff must also pay the Defendant's costs of these proceedings although in all the circumstances the Defendant may see fit to re-consider its position on the counter-claim and indeed the costs of the action. In this regard I conclude by saying that I am satisfied the Plaintiff has made every reasonable attempt to obtain other employment. I leave the matter there.

JOHN E. BYRNE
JUDGE

Cases referred to in judgment:

Clouston & Co. Ltd. v. Corry [1905] UKLawRpAC 66; (1906) A.C. 122.
Harmer v. Cornelius [1858] EngR 939; (1858) 5 CBNS 236.
Laws v. London Chronicle Ltd. (1959) 1 WLR 698.
Wilson v. Racher (1974) ICR 428.

The following additional cases were mentioned in submissions:

In the Matter of an Arbitration between African Association Ltd. v. Allen [1910] UKLawRpKQB 8; (1910) 1 KB 396.
Cuckson v. Stones (1858) 1 E & E 248.
Callo v. Brouncker [1831] EngR 332; (1831) 4 C & P 518.
Baster v. London and County Printing Works [1899] UKLawRpKQB 89; (1899) 1 Q.B. 901.
Jupiter General Insurance Co Ltd v. Shroff (1937) 3 ALL E.R. 67.
Delaney v. Staples (1992) AC 687.
Diners Club (N.Z.) Ltd. v. Prem Narayn Civil Appeal 4/96 F.C.A. (High Court Pathik J.)
James v. Thomas Kant & Co. (1951) 1 K.B. 551.
Searle v. Ridley (1873) 28 LT 411.
Edwards v. Levy [1860] EngR 57; (1860) 2 F & F 94.
Sinclair v. Neighbour (1966) 2 Q.B. CA 279.
Malik v. Bank of Credit & Commerce International SA (In Liquidation) [1997] UKHL 23; (1997) 3 ALL E.R. 1.