Matamoka v Western Shipping Company (Fiji) Ltd [2006] FJHC 75; HBC390.2001 (22 September 2006)

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Appearances: Messrs Mishra Prakash & Associates for plaintiff
No appearance for defendant

[1] This is a claim for wrongful dismissal. The plaintiff was employed by the defendant as a Technical Sales and Promotion Officer. It is not in dispute that on 14 January 2000 he contracted with the defendant to be employed as such. The offer of employment was set out in the defendant’s letter dated 14 January 2000 which is reproduced below:

This is to advise that you have been offered a position of Technical and Sales Promotion Officer with Western Shipping Company Limited.

Your job description and duty statement is attached. You will be paid a salary of $15, 000.00 per annum.

Your contract will initially be for a period of three years. You will initially be on a probationary period for six months after which, on satisfactory performance, your position will be confirmed.

[2] On the same day the plaintiff endorsed his acceptance of the appointment subject to the terms specified in the offer letter by signing the letter.

[3] The letter evidences the essential terms and conditions of the plaintiff’s employment with the defendant. It was the contract of employment between the parties which contained the terms each party agreed to be bound by. There is no evidence before me suggesting otherwise.

[4] On 4 August 2001 the plaintiff’s contract was terminated. The termination letter reads:

As part of the restructuring of the company, it has been decided to abolish the position of Technical Officer from the staff cadre.

There is really no need for the position as in the past two years the company has not really gained any benefit from this position.

[5] The plaintiff claims that the defendant did not comply with the provisions of the contract of employment and the Employment Act (Cap. 92 – the Act) and unlawfully terminated the plaintiff in that:

(b) the plaintiff was not informed of the complaints against him nor was he given the opportunity to state his case before the termination decision was made

(d) the plaintiffs Fiji National Provident Fund contribution was not paid by the defendant from October 2000

[6] It is alleged that since the plaintiff’s dismissal he has been unable to obtain other employment and has suffered and continues to suffer loss and damage. The plaintiff contends that he is entitled to special damages being loss of wages from the date of dismissal at $288.46 per week for the unserved period of the contract of employment. The unserved period consists of 1 year 4 months and 1½ weeks (70.83 weeks). The sum allegedly due to him is calculated at $20, 431.62 – (288.46 x 70.83 weeks). He maintains that he is also entitled to an additional $45, 000.00 (3 years salary) on the basis that he was initially employed for 3 years and had been given a strong impression that the initial 3 year period would be extended for a further 3 year term. He also claims general damages.

[7] As with any other contract, the starting point is the agreement itself. The general rule is that an employee wrongfully dismissed can recover as damages pecuniary loss resulting from failure to terminate the employment in accordance with the terms of the contract. In the usual case where the employment is terminable by notice, damages will be equivalent to wages for the period of proper notice. In the present case, the employment was for a fixed term of three years not subject to termination by notice. If the employment is for a fixed term not subject to termination by notice, it has been held that damages will be equivalent to the salary or wages over the entire period – subject to certain qualifications.

[8] The applicable principles were discussed by Justice Pathick in Fiji Electricity Authority –v- Naiyaga [1998] FJHC 77; HBA 0004 of 96s (29 May, 1998). The principles are set out at page 9 of his judgment as follows:

"Different considerations apply in the case of fixed employment as stated in the following passage:

"for a fixed term not subject to termination by notice, damages will be equivalent to the salary or wages over the entire period – subject, however to reduction for likelihood of re-employment within the remaining contractual period, and the possibility of termination of the contract before the expiry of the period without fault on the part of the employer. Thus the Court is entitled to take into account the risk of ill-health, premature death, and the possibility of termination by reason of fraud or misconduct in determining the quantum of damages payable". (Macken, MacCarry & Sappideen’s THE LAW OF EMPLOYMENT 4th Ed. 1997 at p. 296)

One other aspect pertaining to measure of damages is that the employee must mitigate his loss as a result of the breach. This requires the employee to diligently seek suitable alternative employment but no worthwhile submissions were made in this regard. On this subject Bowers at p. 129 says:

"He cannot sit back at home and mount up his losses in the confident expectation that he will be able to claim them from his former employers. In particular he must take reasonable steps to obtain another job, and if he succeeds any wages earned in the new position will be deducted from wages due over the period of notice. If, on the other hand, he does not try to find another post, a sum is taken away to represent his lack of effort. Each case depends on its own facts but the dismissed employee does not normally have to take the first job which comes along. He may also act reasonably in refusing to take another position in the company which has just dismissed him. He is entitled to preserve a skilled job, so that a painter is not expected to take work as a general labourer (Edwards v. SOGAT [1979] 3 WLR 743) nor a managing director as an assistant manager (Yetton v. Eastwoods Froy [1967] 1 WLR 104)."

[9] Applying these principles, I find that the plaintiff is entitled to be compensated for the unserved period of his contract – a period of approximately 70 weeks. He was employed for a fixed term of 3 years which was not subject to termination by notice. He was in lieu of notice paid a months salary but the fixed term of the contract was not subject to termination by notice. The defendant was not entitled to terminate the contract in the manner it did. The dismissal was wrongful. However I am required to take into account in assessing damages, the likelihood of re-employment within the remaining contractual period. The plaintiff testified that he worked for CR Engineering and Design for 8 months during the remaining 3 year period and was paid $300.00 per fortnight which was significantly lower than what he had earned under the contract.

[10] I must also take into account also the possibility of termination of the contract before the expiry of the period without fault on the part of the employer. The reason for termination given by the employer was that the company undertook a restructuring exercise and abolished the plaintiff’s position. Although the defendant did not appear at the hearing and the plaintiff’s evidence was entirely uncontested, there was no evidence led to suggest that the reason given of restructuring was not bona fide. The contrary was not pleaded nor advanced in submissions or seriously challenged by the evidence. For example, there was no evidence led to suggest that the defendant engaged someone else to replace the plaintiff after the termination. The structure of its workforce is entirely the prerogative of the employer. Given the paucity of the evidence in regard to the restructuring exercise supposedly undertaken by the defendant, it is difficult to assess whether any blame for the restructure and reduction of its workforce could be attributable to the defendant or not.

[11] However given that the reason for termination was restructuring which resulted in abolishing the plaintiff’s position, the plaintiff’s submission that I take into account in assessing damages for wrongful termination, the lost opportunity to have the contract renewed for a further term of three years is unsustainable. Clearly at the end of the initial three year term, it would have been very unlikely that the plaintiff’s contract would have been renewed because the plaintiff’s position no longer exists. The defendant has already determined that it had ‘no need for the position’. In the circumstances I have found that the plaintiff is not entitled to be compensated for the lost opportunity to renew the contract after the initial 3 year term expired.

[12] The plaintiff also claims $24, 731.00 being alleged hire charges for machinery he owned which he alleges the defendant contracted with him to hire at the rate of $43.00 per day. Aside his testimony, there is no evidence before me substantiating this claim. I am not satisfied that there was an additional hire contract between the parties for the use of the plaintiff’s property in the defendant’s operations. The plaintiff’s evidence falls short of establishing a separate contract for hire. This is also a claim for special damages requiring strict proof. The required standard of proof has not been met. The plaintiff’s testimony, unsupported by any documentary evidence does not suffice. I have also declined to uphold the submission grounded on what appears to be the failure by the defendant to comply with Section 35 of the Act. Section 35 (4) entitled the plaintiff to have the contract presented for attestation at any time prior to the expiry of the period for which it was made. He ought to have exercised his rights under the Act at the relevant time. He had ample time to do so but did not and did not explain why.

[13] Learned counsel for the plaintiff Mr. Mishra submitted that this was a case where his client should be awarded damages because he was dismissed in a harsh and humiliating manner. The case Central Manufacturing Company Limited –v- Yashni Kant (Supreme Court Civil Appeal No CBU 0010 of 2002) is the leading authority for the principle that an employer may become liable in damages if he acts in breach of an independent implied obligation by dismissing an employee in a harsh and humiliating manner.

[14] Their Lordships at page 21 of the judgment expressed the principle as follows:

"In our view, the Court of Appeal correctly held that there is an implied term in the modern contract of employment that requires an employer to deal fairly with an employee, even in the context of dismissal. The content of that duty plainly does not extend to a requirement that reasons be given, or that a hearing be afforded at least here the employer has the right to dismiss without cause, and to make a payment in lieu of notice. It does extend, however, to treating the employee fairly, and with appropriate respect and dignity, in carrying out the dismissal. Each case must, of course, depend upon its own particular facts. However, where, as in the present case, the dismissal is carried out in a manner that is unnecessarily humiliating and distressing, there is no reason in principle why a breach of this implied term should not be found to have occurred."

[15] The plaintiff was a credible witness. He took pride in his work. He had received no complaints whatsoever about his performance. He oversaw and co-ordinated all general maintenance of the defendant’s vessel. He co-ordinated and undertook all necessary repairs. He used his own tools of his trade in his work and received no compensation or payment. He expected to work out the duration of his contract and expected it to be renewed for a further term. He received no indication prior to the 4 August 2001 letter that this was not likely to eventuate. He was clearly distressed and upset by the way in which the termination letter was handed to him, while at home on a Saturday, having been paid in the usual manner the Friday before, without any notice of what was to come the next day. He was taken completely by surprise. Being a professional tradesman he was entitled to plan his life along the lines of the fixed term contract he was employed under. Out of the blue, the contract was terminated. I am satisfied that he had worked beyond the call of duty for the defendant only to be told in the termination letter that the company had not benefited from the services he had provided. Although the defendant was not obliged to consult him whilst undertaking the restructuring exercise and deciding to reduce its workforce by abolishing his position, the additional reason it gave of the company having not benefited from the position over the previous two years conveys the impression that the plaintiff’s services over this period had been of no benefit whatsoever to the company when in fact whilst he was employed he was led to believe otherwise. I have found on the evidence that the defendant had led the plaintiff to believe that he was a necessary part of its workforce. Understandably the plaintiff was hurt and baffled by his employer’s sudden change of heart, so to speak. His feelings of distress and humiliation continue. He expected to serve out the contract and that it would be renewed for a further 3 year term. I have concluded that he was not treated fairly and is entitled to be compensated for the defendants breach of its implied duty of mutual trust and confidence.

[16] However as in the Yashni Kant case, the plaintiff called no evidence to suggest that he had suffered any physical or psychological damage resulting from the manner in which he was dismissed. His evidence regarding the damage done to his reputation was tenuous, at best, and does not provide the basis for a link in which he was treated on the day of his dismissal and his inability to find alternative employment. However in my view he is entitled to some compensation for how he was treated by his employer, in breach of the implied term that he be dealt with fairly, and in good faith, in the context of his dismissal.

(i)	Net wages for remaining contractual period of 70 weeks $228.21 x 70:	$15, 974.70
	Less wages earned of $300.00 per fortnight for 8 months:	$ 4, 800.00
		$11, 174.70

(ii)	Damages for breach of implied term:	$ 1, 500.00
		$12, 674.70

(iii)	Interest at 6% per annum for 5 years:	$ 3, 802.41

	Total:	$16, 477.11

(iv)	Costs to plaintiff assessed in the sum of $1, 800.00

High Court of Fiji

Matamoka v Western Shipping Company (Fiji) Ltd [2006] FJHC 75; HBC390.2001 (22 September 2006)