Fonua v Tonga Communications Corporation [2007] TOLawRp 54; [2007] Tonga LR 291 (14 December 2007)

[2007] Tonga LR 291

IN THE SUPREME COURT OF TONGA

Fonua

v

Tonga Communications Corporation

Supreme Court, Nuku'alofa
Andrew J
CV 692/2001

14 December 2007

Employment law – wrongful dismissal – damages assessed

This proceeding was remitted by the Court of Appeal to a judge of the Supreme Court to assess damages for the plaintiff's wrongful dismissal by his employer, the defendant. The plaintiff worked for the Tonga Telecommunications Commission (later the defendant Corporation) from 1971 until his dismissal in July 1999. At the time of his unlawful dismissal he was the Chief Engineer for the company and only a few days off from his 49th birthday. He had fully expected to continue working for the commission until he reached the retirement age of 60. The plaintiff claimed that had it not been for his wrongful dismissal he would have received promotion to the position of General Manager. It was argued on the plaintiff's behalf that he could only have been dismissed for misconduct; retired for ill-health or he could have resigned voluntarily.

Held:

1. The remedy of an employee who was wrongfully dismissed was an action for damages. The normal measure of damages was the amount the employee would have earned under the contract for the period until the employer could lawfully have terminated the employee, less the amount he could reasonably be expected to earn in other employment.

• 2. Under the Tonga Telecommunications Act (Cap 96) the Board has power to dismiss as deemed necessary for the conduct of the business of the Commission subject to the observance of and compliance with the rules of natural justice -- see Commodities Board v Uta'atu [1990] Tonga LR 92.

• 3. There was no absolute right to employment up to the age of 60. An employee's expectation that he would remain in the job until retirement was not sufficient. The period of time was up until the employer could lawfully have terminated the employee. The court was not to analyse the claims that the employee would not have been dismissed had proper procedures been followed but a reasonable time or reasonable notice must be given. Much would depend on the employee's skills, his age and the length of his service -- see Janicuk v Winerite Ltd [1998] IRLR 63 and Stuart v Armaguard Security [1996] 1 NZLR 484.

• 4. It was reasonable that the plaintiff should have received notice for a period of approximately 1 year. The plaintiff had claimed a salary commensurate with that of General Manager but there was no guarantee that he would have obtained that position and damages were to be assessed on the basis of his salary as at August 2000. After allowing for a gratuity the plaintiff had received, his salary loss was fixed at $38,708.

• 5. The plaintiff had claimed $25,000 damages for damage to his professional reputation. It was held that there was no evidence to support such a claim and no award was made under that head.

• 6. The defendant had a pension scheme and his pension entitlement calculated under that scheme was assessed at $112,138. His lifetime pension continued at the rate of $13,862 per anum.

• 7. The total amount of damages awarded to the plaintiff was $150,846 together with costs to be agreed or taxed.
  

Cases considered:

Commodities Board v Uta'atu [1990] Tonga LR 92

Fonua v Tonga Communications Corporation Ltd [2003] Tonga LR 351

Fonua v Tonga Communications Corporation Ltd [2006] Tonga LR 230 (CA)

Janicuk v Winerite Ltd [1998] IRLR 63

Stuart v Armaguard Security [1996] 1 NZLR 484

Tonga Communications Corporations Ltd v Fonua [2005] Tonga LR 315 (CA)

Statute considered:

Tonga Telecommunications Act (Cap 96)

Counsel for plaintiff: Mr Niu
Counsel for defendant: Mr Tu'utafaiva

Judgment

[1] This matter has been remitted by the Court of Appeal to a Judge of the Supreme Court to assess damages for the wrongful dismissal of the Plaintiff Mr Siosaia Fonua in July 1999 by his employer the TONGA TELECOMMUNICATIONS COMMISSION (The Commission) now the TONGA COMMUNICATIONS CORPORATION LTD (the corporation)

[2] In July 1999 at the time of the plaintiff's dismissal from the commission he was the chief Engineer. As noted in earlier proceedings he had commenced working in the Department in 1971 and he worked continuously for the Department and the commission until 1999. Further, as also noted in earlier proceedings, he was a very highly qualified and experienced Telecommunications engineer and he fully expected to continue working for the commission until he reached retirement. Following a number of incidents the applicant was told to resign and did so.

[3] The history of the subsequent litigation surrounding the plaintiff's dismissal is protracted and convoluted. There were proceedings before the Supreme Court in February 2002 in which the plaintiff claimed that he had been forced to resign. That case was concerned mainly with procedural requirements.

[4] In Fonua v Tonga Communications Corporation Ltd [2003] Tonga LR 351, it was found that the Plaintiff had resigned voluntarily when he realized the alternative was that he would be charged for misconduct. It was held that he had not been wrongfully dismissed. It was also found that he was entitled to any pension or provident fund payments which were due although there was insufficient evidence at that time to enable those entitlements to be calculated.

[5] In Tonga Communications Corporations Ltd v Fonua [2005] Tonga LR 315 (CA), the Court of Appeal held that because of the earlier findings that the plaintiff had resigned he could not have been granted a pension due to the fact that the resignation was at age 49 (The Pension Act required an officer to attain the age of 50). The earlier ruling that the plaintiff was entitled to a pension was reversed.

[6] In Fonua v Tonga Communications Corporation Ltd [2006] Tonga LR 230 (CA), the Court of Appeal held that the plaintiff had been wrongfully dismissed. Because of that finding, the earlier finding that the plaintiff was not entitled to a pension could not now be valid for that had been a finding predicated upon the fact that the plaintiff had resigned and that he had not been wrongfully dismissed. Any assessment of damages must now include a consideration of what pension or provident fund payments the plaintiff may be entitled to. In its Judgment the Court of Appeal said:

"In our opinion, the Commission dismissed the applicant by requiring him to resign in circumstances in which he knew that if he did not, he would be dismissed. That occurred in circumstances where the Commission could only dismiss the applicant if it was established, by proper process, that he was guilty of gross misconduct. That was never established and the applicants dismissal was not lawful. The (then) Chief Justice erred, with respect, in reaching the contrary conclusion. Time should be extended and the appeal should be allowed. Counsel for both the applicant and the corporation ultimately accepted that if we reached this conclusion it would be appropriate that the matter be remitted to a Judge of the Supreme Court to assess the damages payable to the applicant. However we would urge the parties to investigate in the meantime whether the matter could be settled and in particular, whether a pension (or compensation for loss of the pension) might be paid to the applicant."

ASSESSMENT OF DAMAGES

Damages for loss of earnings:

[7] A convenient starting point is a consideration of the period of employment for which the plaintiff is entitled to receive compensation for and that entails the level or position he might have attained in that time.

It is argued on the plaintiff's behalf that he was entitled to have been employed up to the age of 60 and could only have been dismissed for misconduct; retired for ill health or resigned voluntarily. It is said that having regard to the fact that the Plaintiff was employed under a contract of employment which was in "the main" contained in the Defendant's Staff Regulations, there was or is no authority to terminate the employment by giving any period of notice (except for redundancy). Hence it is argued that the Plaintiff's period of employment continues or would have to age 60 when he is required to retire.

The remedy of an employee who has been wrongfully dismissed is an action for damages. The normal measure of damages is the amount the employee would have earned under the contract for the period until the employer's could lawfully have terminated it, less the amount he could reasonably be expected to earn in other employment.

[8] Under the Tonga Telecommunications Act (Cap 96) the Board has the power to dismiss the Plaintiff as deemed necessary for the conduct of the business of the Commission subject to the observance of and compliance with the Rules of natural justice: See Commodities Board v Uta 'Ato [1990] Tonga LR 92.

There is no absolute right to employment up to the age of 60 and I am satisfied that the plaintiff could have been lawfully terminated under the provisions of the Act. An employee's expectation that he will remain in the job until retirement is not sufficient. The period of time is up until the employer could lawfully have terminated the employee. The Court is not to analyze the claims that the employee would not have been dismissed had proper procedures been followed: See Janicuk v Winerite Ltd [1998] IRLR 63. But a reasonable time or reasonable notice must be given. Much will depend on the employees skills, his age and his long service: see Stuart v Armaguard Security [1996] 1 NZLR 484.

[9] In this case the Plaintiff was the Chief Engineer of the Commission. He was appointed to that post in 1989 having held the post of controller of Planning and Development in the Telegraph and Telephone Department and then Engineer of Planning and Development in 1998 after he attained his Bachelor of Electrical Engineering. He was the most senior in service and highest in qualification next to the General Manager. He was appointed as the Technical Officer after the General Manager.

[10] The Plaintiff was born on the 8 August 1950. His resignation was effective from the 29th July 1979, that is a few days before he turned 49. He had been with the Department since 1971. Given this length of service and the fact that he was the second most senior executive in the commission I think that he deserved a long period of notice before he should have been replaced. It was a harsh blow that after a lifetime of work with the Commission and with his skills and at his age that he was deprived of his pension.

[11] In all of these circumstances I think it is reasonable that he should have received notice for a period of approximately one year. That period would have taken him to age 50. I think that a reasonable time in which his employment should have continued is up until the 8th August 2000. That would mean up until the Plaintiff attained the age of 50.

I would assess damages for loss of earnings on the basis of substituted employment for the period 29 July 1999 to 8 August 2000.

[12] The Plaintiff claims a salary commensurate with that of the General Manager. That is because it is said that the General Manager, Lemeki Malu had resigned on 31 October 1999 and it is said that the Plaintiff was entitled under the Commission Staff regulations to be appointed General Manager in his place. The Plaintiff had pointed to his fitness to hold such a position, his qualifications and his seniority. But I do not think he had an exclusive right to be appointed General Manager. The regulations point to the fact that where two or more persons are regarded as equally fit and suitable for promotion then seniority shall be considered. It was conceded in earlier proceedings that merit played its part in promotions. The plaintiff had no guarantee that he would obtain the position. As stated earlier (in Fonua v Tonga Communications Corporation Ltd [2003] Tonga LR 351) that: "In the end, the only basis for this part of his claim appears to be that, in past, happier times, the General Manager, Lemeki Malu, had told him he would succeed to his position. These statements, it need hardly be added, were made prior to the events of 1998 and 1999 which resulted in such public disagreements between the two men"

[13] The reality is that events were such that the Plaintiff was in all probability, not going to be appointed as General Manager. Damages for loss of earnings are assessed on the basis of the Plaintiffs salary as at the 8 August 2000.

[14] The Plaintiff was paid a gratuity which was said to be the equivalent of 3 months salary. Later it was expressed as salary. That was an amount of $7,170.33 after tax. Salary for the remaining 9 months and 10 days after tax is $22,308

Loss of Salary	$22,308
Interest at 10% from 8.8.2000 to date	$16,400
Total	$38,708

[15] CLAIM FOR DAMAGE TO PROFESSIONAL REPUTATION DISTRESS, HUMILIATION AND HARDSHIP

The Plaintiff acknowledges that he cannot now claim for damages for distress but that there is a legitimate claim for damage to reputation and he claims $25,000 under this head of damages. It appears that this was not previously pleaded. It does not seem to have been raised in previous proceedings. Additionally there is no evidence of what the alleged injury to reputation was let alone any support for the proposed amount of $25,000. In the circumstances I make no award for loss of reputation.

[16] PENSION ENTITLEMENT

The Commission had a pension scheme at the time under which an employee was entitled to a pension upon attaining 50 years of age, which was calculated according to the schedule to the Pension Act as follows:

"2 subject to the provisions of the Pensions Act, and of these regulations every public officer holding a pensionable office in the Kingdom who has served 15 years or upwards in the Kingdom may be granted on his retirement a pension at the rate of fifteen – sixtieths of his salary with an addition of one-sixtieth in respect of each complete year of such service in excess of 10 until a maximum of forty – sixtieths is reached."

The Plaintiffs salary as at the date of his substituted service, that is the 8 August 2000, was $28,680. He commenced employment in 1971 meaning that he completed 15 years in 1986 which entitled him to 15/60 pension entitlement. Thereafter he served a period of 14 years so that his additional pension entitlement was 14/60.

The Pension entitlement is calculated as follows:

Pension	15/60
Pension Rate– Basic	14/60
Additional	29/60

Pension Entitlement = Present Salary x Pension Rate 220

= $28,680 x 29/60

= $13,862 PA

The sharing of Pension entitlement between the Tonga Telecommunications Commission and the Government of Tonga as in accordance with the relevant provisions of the regulation is as follows:

TONGA TELECOMMUNICATIONS COMMISSION (62%)	= $8,594
GOVERNMENT OF TONGA (38%)	= $5,266
TOTAL PENSION ENTITLEMENT	$ 13,862 PA

The pension entitlement commenced on 8 August 2000 so that the pension payable from 8th August 2000 to today the 14th December, 2007 at 10% interest = $112,138

[17] In summary damages are assessed as follows:

A) Loss of salary to 8.8.2000	= $22,308
Interest at 10% to 15.12.07	= $16,400
TOTAL	$38,708
B) Pension Entitlement
Pension entitlement from 8.8.2000 to 14.12.07 at 10% interest	= $13,862 pa
TOTAL	$112,138
The total amount owing to the Plaintiff to date (14.12.07)	= $38,708 (Salary)
	= $112,308 (Pension)
	= $150,846.00

The Plaintiff's lifetime pension continues at the rate of $13,862 PA.

Damages are awarded to the Plaintiff in the sum of $150,846. I award costs to the Plaintiff as agreed or taxed.