Moengangongo v Leiola Group Ltd [2009] TOLawRp 22; [2009] Tonga LR 232 (5 June 2009)

IN THE SUPREME COURT OF TONGA
Supreme Court, Nuku'alofa

CV 38/2008

Moengangongo

v

Leiola Group Ltd

Shuster J
16 April 2009; 5 June 2009

Employment law – dismissed before police report received – wrongful dismissal claim – unreasonable conduct of employer – claim upheld

The plaintiff was employed by the defendant company, as an assistant sales supervisor and the person in charge of its duty free shop situated inside the departure lounge of Fua'amotu International Airport. At the time of her dismissal, the plaintiff was paid an annual salary of $8,516. There were stocktake shortages in November and December 2006 for which the plaintiff was punished. She paid the shortfall, was suspended for two weeks, was demoted, and her base salary was reduced. The General Manager conducted an internal investigation into the loss of money and reported the loss to the police. Before the police report was received the General Manager dismissed the plaintiff. The plaintiff claimed she was wrongfully dismissed. She claimed damages, re-payment of retirement benefits, holiday pay and costs from the defendant.

Held:

1. The Court ruled that any deduction made by the defendant company covering the loss was unlawfully deducted by the defendant company especially because the money was deducted prior to the conclusion of the ongoing police investigation.

2. The conduct of the defendant company fell within the category of unreasonableness under the Wednesbury test.

3. The Court found for the plaintiff and reserved the issue of damages to allow both parties to attempt to come to an agreement as regards to future reemployment of this plaintiff in another post within the company.

Cases considered:

'Aisea v FIMCO CV 678/2007

Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223

Kasimili v Vava'u Press [2002] Tonga LR 168

Koloa v Helu [1999] Tonga LR 227

Counsel for the plaintiff : Mr Edwards
Counsel for the defendant : Mrs Stephenson

Judgment

Introduction

The plaintiff claims she was wrongfully dismissed from her employment as an Accounts Clerk by the Leiola Group of Companies on 22nd June 2007.

As a consequence of her wrongful dismissal, the plaintiff claims damages, re-payment of retirement benefits, holiday pay and costs from the defendant as per her Statement of Claim filed on the 16th May 2008.

The plaintiff claims the defendant is a Public Enterprise — as defined under section 2 of the Public Enterprise Act 2002 as follows: The Public Enterprise assertion the defendant states was not specifically pleaded in the Statement of Claim.

Brief Facts

The plaintiff was employed by the defendant company, as an assistant sales supervisor and the person in charge of its duty free shop situated inside the departure lounge of Fua'amotu International Airport. At the time of her dismissal, the plaintiff was paid an annual salary of $8,516.00

On 30 December 2006, the Duty Free Shop at the departure lounge of the Fua'amotu International Airport was open for business. At the same time the duty free shop conducted its monthly stock taking for December 2006.

One Mr. Kivalu Tu'iono — had been sent from the defendant's head office - to assist in the monthly stock take at the Airport shop.

At the close of business on 30th December 2006 the total receipts for the day's cash sales (the takings) $7,112.00-were counted by the plaintiff, and another member of staff - Emalita Ngungutau - in the presence of Mr. Kivalu Tu'iono.

The daily takings of $7,112.00 were then sealed in a plastic bag and handed to Kivalu Tu'iono - to transport and lodge at the companies Head Office.

The plaintiff claims she heard nothing further concerning the 30th December 2006 takings, until the 3rd February 2007, when Falakiko Taimani advised the plaintiff verbally that there was a problem with the takings for the 30 December 2006. The plaintiff says this information was relayed to her after thirty-four days.

The plaintiff claims on or about the 6th February 2007 she met Falakiko Taimani and asked him, "Why was the money missing?" — Because the staff work records must have been received at Head Office — as staff had been paid for time worked in December 2006 the time sheets had been forwarded in the plastic bag together with the December 2006 takings of $7,112.00.

Falakiko Taimani told the plaintiff he would make enquiries. The plaintiff did not hear from Falakiko Taimani — so she said she went to see him again and that meeting took place, on or about 12 February 2007.

The plaintiff also saw the defendant's witness DW1 - Paula Taumoepeau the same date. The plaintiff told the court she saw DW1 twice - she told the court she was suspended on full pay on 17 February 2007 "While an investigation took place." A formal notice of suspension- contained in a letter dated 17 February 2007 was handed to the plaintiff that same date.

Evidence

There were two witnesses who testified in this case. The plaintiff PW1 gave evidence in support of her claim — and DW1 Paula Taumoepeau gave evidence for the defendant company.

The plaintiff says the evidence of the plaintiff was not contradicted or rebutted - and to a large extent the evidence was confirmed by the witness DW1 - Paula Taumoepeau.

Paragraph 6 of the statement of claim which alleged the money was counted and was handed to Kivalu Tu'iono - to deliver to Head Office - and the plaintiff says this paragraph in the Statement of Claim, was admitted by the defendant company.

Paragraph 6 of the Statement of Claim - provided as follows:

"On or about the 30th day of December 2006 at the conclusion of work and closing of the shop the takings and receipts were counted and the cash of $7,112.00 and report was given to the company courier Kivalu Tu'iono who is responsible for the taking of the money to Head Office."

Paragraph 6 of the Statement of Defence admitted the plaintiff's allegation as follows:

"It admits the allegations contained in paragraph 6 of the statement of claim."

Quote- "While an investigation takes place". The plaintiff was asked to prepare a statement and deliver it to DW1 no later than the 19 February 2007.

The Decision to Dismiss

The plaintiff says - DW1 said in evidence he had enough evidence to dismiss the plaintiff on February 2007 - but he told the court he wanted to be fair and give the plaintiff a chance, so the matter was referred to the Police for investigation.

The plaintiff argued it would be difficult to reconcile this statement - with DW1's request on 17 February 2007 for a written explanation to explain the packing of the missing pay and its transfer to another member of staff - to be delivered no later than 19 February 2007. The plaintiff says DW1 said he was still enquiring into the missing money - yet DW1 said in his evidence that on 17 February 2007 - he was ready to dismiss the plaintiff.

The plaintiff says DW1 was not exercising proper judgment and care because he did not have all the facts before him; and DW1 had admitted in evidence that the money was counted and given to Kivalu Tuiono to deliver to Head Office.

The plaintiff says this demonstrates the witness DW1 was relying on what he called "wrong grounds" to dismiss the plaintiff. Importantly, in his evidence given in open court — DW1 also admitted that if he had received the Police report before dismissing the plaintiff, - he would NOT have dismissed her.

DW1 was asked in cross examination -what was the determining factor for his decision to dismiss the plaintiff from her employment? DW1 referred to the shortages in November 2006 of $393.80, and the December 2006 shortage of $1919 on the two stock takes. DW1 was asked by plaintiff's counsel about punishing the plaintiff— twice because on those occasions the plaintiff repaid the shortages in full before 16 January 2007.

Further the plaintiff claims she was punished as follows:

i) The plaintiff was suspended for 2 weeks - without pay.

ii) Further the plaintiff was demoted.

iii) The plaintiff was demoted by the loss of seven pay increments- in other words $3,028.00 was deducted from her salary.

Finally the plaintiff was receiving $11,544.00 per annum - but her base salary was reduced to $8,516.00. Loss of $3028 [$252.33 per month].

The plaintiff claims she was severely punished for the shortage on the stock take.

The plaintiff says the company did not suffer any loss because the company was fully reimbursed for their loss and they refer to the letters dated 12 January 2007 (Production "C" in the defendants list of productions) and the letter dated 22/2/2007 from the plaintiff to the company secretary P5 in the plaintiff's list of production.

The plaintiff says she complained bitterly about her unfair treatment. It was submitted by the plaintiff the decision to dismiss her was flawed both in fact and in law. DW1 had erred in making that decision and they say DW1 admitted so during cross examination.

The plaintiff says there was no evidence the plaintiff had taken [or stolen] the money or that she was responsible for its loss - yet the plaintiff was blamed and she was dismissed from her employment as a result.

Retirement Benefits

The plaintiff argues there was no proper reason for the plaintiff's dismissal. They claim the defendant is a Public Enterprise and it was not open to it to dismiss an employer summarily - for the wrong reason. They say should the court uphold the plaintiff's claim - it follows that the defendant was wrong in withdrawing/withholding the defendant's contribution of $5,229.34 from her benefits and- also wrong in applying her contribution of $2,666.96 and the plaintiff's holiday pay in part payment of the missing money — arising from the incident on 30 December 2007.

The full benefit of $7,844.01 as stated in production "F" in the defendants list of production together with interest of 12% thereon from the 31/12/2006 to the date of payment should he repaid to the plaintiff. Two and a half years interest - at 12% and that would yield a figure of $10,428.45.

In production "F" the contribution from the plaintiff was applied in payment of the missing money on the 30/12/2006 (not the date of dismissal). Interest of 2% should be added to the plaintiff's contributions but the period for that percentage is not stated. The plaintiff claims 10% on her benefits from the 31/12/2006 until payment -plus the 2% making a total of 12%.

In production "F" by the defendant it shows - that holiday pay of $1,822.18 was due to the plaintiff and this amount was applied in part payment of the missing money. This amount was calculated as at 31/12/2006 as shown in production "F". If calculated as at 22/6/2007 the date of dismissal it would be more. The plaintiff is entitled to 10% interest on the unpaid money from 31/12/2006 until payment. Two and a half years interest at 10% would yield a figure $2,216.94.

Damages for Wrongful Dismissal

The plaintiff claims - damages payable for wrongful dismissal - is normally calculated on a basis of loss of 6 months' salary for a Senior Officer in a public company. In Tonga the situation is somewhat different as it is more difficult to obtain employment, particularly if one is a woman let alone a widow with three dependent children.

The plaintiff - says in developed countries the situation is different. It is easier to obtain employment if you lost your employment. This situation was recognized by Ford CJ in calculating the damage awarded in the unreported case of Vulaono 'Aisea v FIMCO CV 678/2007. Vulaono 'Aisea was on a salary of $17,000.00 per annum - the plaintiff was awarded damages of $10,000.00.

The plaintiff says she is from the village of Lapaha. Her dismissal has been associated with theft of money from her employers. The plaintiff says this case is causing her considerable embarrassment and ridicule. The plaintiff has suffered as a result of her dismissal and she asks for compensation for the wrong done.

It was strongly submitted - the plaintiff has established her case against the defendant and is entitled to damages, repayment of retirement benefits, holiday pay and costs.

Defendant's Case

The defendant argues that the plaintiff's claim for $50,000 is excessive. They say the plaintiff claimed $50,000.00 even though she was being paid at just one sixth of that amount at the time she was dismissed.

The defendant says that the plaintiff's inflexibility has precluded any proper negotiated settlement or, resolution of the matter - between the parties to this suit.

The defendant argues there was a contract of employment between the parties and that the claim is based upon contract. The terms of the contract were contained in the Conditions of Service Manuel dated 10 September 2002 Defence Exhibit A.

The plaintiff disputed this in her admitted facts and testified she had never seen nor signed the Conditions of Service Manuel. In the courts view it is more than likely the plaintiff in her position as an OIC- would have had sight and knowledge of the Conditions of Service Manuel. Thus it would be reasonable for the court - to assume that the Conditions of Service Manuel contained the terms of the contract of employment - between the parties - to this suit.

The defendant argues clause 13.2 of the Manuel clearly sets out the procedures which were to be followed in relation to disciplinary procedures to be followed in respect of the plaintiff. DW1 testified he was familiar with the disciplinary provisions contained in the Manuel and he testified he had also sought the advice of the defendants Company Solicitor when he dealt with the incidents of stock shortage at the airport shop where the plaintiff worked and this suit.

DW1 testified that he acted in accordance with the provisions of the Manuel and told the court he personally conducted an internal investigation and had interviewed staff members obtaining written statements from the staff members who worked at the airport shop.

DW1 testified he referred the matter to the police for a police investigation as allowed under the rules section 13.2.3 of the Manuel. DW1 confirmed he wrote the letters dated 9th January 2007 and 17th February 2007 to the plaintiff setting out what action he took and offering the plaintiff the opportunity to present her account of the incidents.

DW1 told the court how the plaintiff had over time worked her way up the ladder at the defendants company and had been promoted to the position of officer in charge of the defendant's duty- free shop at the airport. He testified as to the responsibilities and the obligations which the position brings.

DW1 was asked why he had decided to dismiss the plaintiff- DW1 said although the stock shortages were of minor amounts and are expected in the normal course of business - there had been stock shortages in November and December 2006 followed by a larger shortage at the end of December 2006.

After conducting an investigation - and taking into account all the circumstances, and additionally by consulting his companies solicitors DW1 testified —

"DW1 felt the plaintiff could no longer be relied upon to effectively manage and control stock shortages at the airport and as a result he concluded she was incapable of carrying out the duties of officer in charge.

In cross examination the defendant says the plaintiff admitted it was her responsibility to make sure that stock shortages did not occur at the store, and that she had failed to do so on two separate occasions and when asked if she was doing her job properly, she replied, NO.

DW1 testified that as the General Manager of the defendant company - he was responsible for the hiring and the firing of employees and that section 13 of the Conditions of Service Manuel gave him the discretion to determine appropriate penalties- including the dismissal of employees for serious breaches of discipline.

When he was asked if the Conditions of Employment Manuel required him to await the results of a police enquiry or investigation BEFORE deciding to dismiss an employee —he said NO.

The defendant says interestingly the letter from Detective of Police Helepiko in the plaintiffs bundle states the evidence is not sufficient to "Issue any charges before the court." The defendant says- the letter does not say that the plaintiff was completely innocent of any wrongdoing.

The defendant argues that the plaintiff's submissions that there are two fundamental issues in this case which require consideration are-

[1] Whether the plaintiff embezzled the cash

[2] Whether the plaintiff's negligence was the cause the money went missing

The defendant says neither of these issues have any relevance to the defendants decision to dismiss the plaintiff- and they say these are red herrings. They say this is a claim based upon contract law and the only relevant factor for determination is:-

Whether the defendant acted within the terms of the employment contract in dismissing the plaintiff.

If not, then the dismissal is wrong, and the plaintiff is entitled to recover the damages allowable at law. The defendant says- the plaintiff believes she was treated unfairly but the fairness or otherwise of the dismissal is not relevant to whether the dismissal is wrong in the present case, because section 13.3 of the Conditions of Service Manuel expressly provided the GM— DW1 with a discretion to dismiss the plaintiff after having taken into account all of the circumstances of the case.

The defendant says that DW1 followed the guideline in the Conditions of Service Manuel and he acted within the scope of his authority in deciding to dismiss her. The defendant says the court should not interfere with their right under the contract to make the decision to dismiss the plaintiff, no matter how erroneous or unfair the plaintiff may consider that decision to be.

The defendant raises in their closing submissions the facts the plaintiffs allege they are a Public Enterprise pursuant to the Public Enterprise Act 2002 and that it was not open to dismiss the employee, for the wrong reason. The defendant points out this point was not specifically pleaded in the Statement of Claim and that it was not now open to the plaintiff at this late stage to try to assert that the defendant is a public enterprise and therefore subject to the principles of natural justice.

They say in any event it is clear from the correspondence produced at trial, the reasons for the plaintiffs dismissal was clearly stated, and that the plaintiff had been given the opportunity to present her arguments — before the decision to dismiss her was made and therefore the elements of natural justice- although not required of the defendant at law were applied and satisfied.

The Defendants Arguments on Damages

The defendant says the plaintiff has failed to prove that the defendant was wrong in law, when DW1 dismissed the plaintiff and they argue that the claim should be dismissed in its entirety.

The defendant says the claim for $50,000 is outrageous and the sum- gave them little chance to settle. The defendant claims the full cost of the action.

The defendant says even if it were found that the Conditions of Service was not the basis of the contract of employment between the plaintiff and the defendant, then at common law the relationship of employer and employee is held to be a contractual one, and there is an implied term in all such contract notices that the employment may be terminated on reasonable notice.

The defendant says that the 3 month period provided for in the Conditions of Service Manual is indicative of what a reasonable notice period is; or would be under a common law employment contract between the plaintiff and the defendant.

The defendant argues that if the dismissal is found to be unjustified, then given that the plaintiff has admitted that her claim is based on contract, they say the law is very clear. They argue that the plaintiff is entitled only to recover the pecuniary loss resulting from the defendant's repudiation of the employment contract. (Kasimili v Vava'u Press). The defendant says under clause 12.6 of the Conditions of Service Manuel requiring employees to give three months written notice of resignation, or retirement on the basis of an annual salary of $8,516 being paid at the time of dismissal, the maximum award of damages that should be awarded in this case would be $2,129.00 and not the $25,000 which is claimed.

The defendant argues damages cannot be awarded for distress occasioned for wrongful dismissal so the plaintiffs claim for loss of reputation and hardship in the sum of $20,000 is not available in law. The defendant argues the unreported case of AISEA is irrelevant to the present case. The defendant sets out in detail the plaintiffs entitlement to holiday pay and the retirement fund.

Rebuttal

The plaintiff says the defendant's introduction and reference to the case of Kasimili v Vava'u Press [2002] Tonga LR 168 is a submission of criticism and not one of merit. The passage quoted from Kasimili's case is obiter. It was made by the Chief Justice at the end of his judgment after finding for the plaintiff.

The issue of quantum varies from one case to another. It is a relative question depending on the circumstances of each case, the position of the employee, the loss suffered and manner of dismissal. In the case of Koloa v Helu [1999] Tonga LR 227 Finnigan J. at page 237 referred to the question of damages and reasonableness as an implied term in employment contracts.

He said:

"This is that damages are recoverable on the basis of breach of an implied term, but are recoverable primarily to compensate for the breaches of the contract. Next, for wrongful dismissal in breach of contract there are settled principles for calculating damages assessed on the plaintiffs proved financial loss, and damages are available for distress and humiliation that arises from the manner of the dismissal."

In the Kasimili case, the plaintiff had no experience in the advertising industry and the term of his employment was uncertain. However the Chief Justice held that his entitlement was $50 a week plus 5% commission on payment of advertising space sold by him. In such a situation the small award of $457.92 (2 weeks wages plus commission) and comment of the Chief Justice was not surprising.

Five years later the Chief Justice in the unsettled case of Vulaono 'Aisea v FIMCO CV.678/07 made an award of damages for wrongful dismissal based on more than 6 months wages. The plaintiff was in charge of the defendants shop at Vava'u and on a salary of $17,000.00 per annum. The plaintiff says the facts of the present case are similar to Vulaono 'Aisea's case. In the present case the plaintiff was in charge of the defendant's largest duty free shop situated at the departure lounge, Fua'amotu Airport. She was on a salary of $11,544.00 which was reduced by $3,028.00 to $8516.00 on 9 January 2008 prior to her suspension and dismissal.

In wrongful dismissal cases the Courts in Tonga apply the common law principles and the law of contract with slight adaptation to local conditions. Employment and a good position and income for a Tongan family are very difficult to obtain. Employment opportunities are limited and scarce. Once you are dismissed for alleged wrong doing you are thereafter not employable, particularly if you are in the middle age group or above. You are also ridiculed in the small community you live.

The reference to the sum of $50,000.00 claimed as precluding any negotiation for the resolution of this matter - is totally unfounded. When the plaintiff wrote in February 2008 and complained about her treatment the defendant ignored it. When she was dismissed her lawyer wrote to the defendant. They did not reply. After the action was commenced, it was referred to mediation and up to and including the trial there has not been a single gesture or suggestion that the case should be settled. The defendant maintained the claim should be dismissed with costs.

The defendant's submission on this point is, one of paying lip service to a principle which it did not apply or made any attempt whatsoever to do so. The defendant should have stated the amount claimed as being divided into 3 parts-

i.e.

(i) Loss of employment- $25,000.00

(ii) Loss of entitlement- $5,000.00

(iii) Distress humiliation etc- $20,000.00

There are 3 separate and legitimate heads of claim clearly stated in the statement of claim.

Contract of Employment

The plaintiff claims the defendant with respect appears to miss the point. They say any employment is a form of contract. The proof of the conditions of employment and the signing of a contract of employment is another matter.

The General Manager DW1 Paula Taumoepeau did not witness the agreement between the defendant and the plaintiff or, serve the Conditions of Service Manual on the plaintiff. DW1 was asked, "Whether there was a signed declaration (by the plaintiff) pursuant to condition 18 of the Manual. The answer DW1 gave was "NO". There was no evidence that the Head Office of the defendant company was destroyed in the riots of November 2006.

Decision to Dismiss

The plaintiff says the explanations given in paragraphs 3.2 and 3.3 of the defendant's written submissions appear, to be confused.

Part of the statement of evidence in paragraph 3.3 of the defendant's submissions goes to the issue of wrongful dismissal. It reads-

"When asked why he decided to dismiss the plaintiff Paula Taumoepeau said that although stock shortages of minor amounts are expected in the normal course of business, whilst the plaintiff had been OIC there had been stock shortages in November and December 2006— which had been admitted by the plaintiff - followed immediately thereafter by further and much larger shortage at the end of December 2006"

The plaintiff did not admit the losses. She challenged it in her letter of 12 January 2008 she disputed the loss of the takings for 30/12/07 and the responsibility for its loss.

The penalty for the shortages were set out in Exhibit B (letter dated 9/1/2007) as follows-

a) Suspended without pay for 2 weeks with effect from January 2007.

b) Demotion from Sales Supervisor to Assistant Sales Supervisor.

c) The salary was reduced by $3,028.00 from $11,544.00 to $8,516.00.

d) She is to pay the retail value of the shortages of $2,312.80 before 16/1/2007.

e) She is not to be considered for salary increment until after 8/1/2008.

f) She is not to be assessed or considered for promotion until after 8/1/2008.

g) Any further lapses will be treated severely.

It is submitted when the explanation of the plaintiff in Exhibit C (letter dated 12/1/2007) is considered or is taken into account the penalties imposed above are severe, unreasonable and draconian. Further in imposing the penalties the General Manager failed to follow the procedure set out in the conditions of Service Manual dated 10/9/02 which he claimed as binding on the plaintiff.

The explanation of the plaintiff in Exhibit "C" (letter dated 12/1/07) disputed the shortages and method of stock taking in the following respects-

a) The variances are due to miscounting and wrong input by Kiko and Kivalu (from head office).

b) The shortage for November of $393.80 was for 3 Crunchie T/size x 250g and 2 Picnic T/Size x 250g left in the computer but there was no stock in the shop when she was placed there as Supervisor (rotated there). It was wrongly charged to her and Kivalu was asked to adjust these but was never done.

c) The Departure Shop is the biggest shop in the company and the shortage for December should be divided between her and the staff responsible for each section. The staff- were warned and the procedure of the staff sharing the loss has been applied as a company practice in previous years.

d) Unfair deployment of staff. The number 3 OIC at the arrival shop is smaller than the Departure shop where the plaintiff was the only OIC.

e) Unfair decision to pay all the shortages by the 16/1/2008 which is within 1 week from the date of General Manager's letter. Two of the staff from the other shops had shortages of over $2312.80 in their respective shops but were given time to pay by deduction from their salary.

The procedure for Disciplinary Cases is set out in paragraph 13.2.4 (b) (iii) in the Conditions of Service Manual. It states:

"(b)(iii) General Manager- shall at the earliest opportunity sent a letter to the employee setting out clearly the following:

The charge (s)

The facts including any documents relied upon to support the charge.

Invite the employee to submit any representation within the following 7 days.

Management shall maintain full and detailed account of the case including the representation made by the employee for any further consideration

Exhibit "B" is the letter dated 9/1/2008 with the penalties was send to the plaintiff without warning requesting the plaintiff to explain the shortages. When the letter was received the plaintiff immediately responded and asked for her explanation to be considered. It was ignored, as was the procedure for disciplinary action. Her treatment can only be described as very unreasonable, and contrary to the defendants declared Rules of Procedure.

The injustice in the decision to dismiss is clear from the evidence of the General Manager- see passage of evidence set out in paragraph 3.2 hereof. This is the type of unreasonableness referred to by Finnigan J in Koloa v Helu (supra). His Honour held that there is a principle at law implied in contracts of employment that the parties 450 must conduct themselves in a way that is not likely to destroy or seriously damage their relationship.

At page 234 paragraph 2 to the end of the passage the Judge said:

"This principle is illustrated in a 1997 case about repudiatory breach in an employment contract, Malik v. Bank of Credit and Commerce International SA [1997] UKHL 23; [1997] 3 All ER 1 (HL). At p 5f and following Lord Nicholls made the following observation:

...[the bank in that case] was under an implied obligation to its employees not to conduct a dishonest or corrupt business. This implied obligation is no more than one particular aspect of the portmanteau, general obligation not to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in the manner the employment contract implicitly envisages...

The trust and confidence required in the employment relationship can be determined by an employer, or indeed an employee, in many different ways. I can see no justification for the law giving the employee a remedy if the unjustified trust-destroying conduct occurs in some ways but refusing a remedy if it occurs in others. The conduct must of course, impinge on the relationship in the sense that looked at objectively, it is likely to destroy or seriously damaged the degree of trust and confidence the employee is reasonably entitled to have in his employer...

Further, he commented (at p 5h and j and p 6a):

[To contravene this principle, the employer's] conduct must, of course, impinge on the relationship in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employee is reasonably entitled to have in his employer...

A breach occurs when the proscribed conduct takes place...

Proof of a subjective loss of confidence in the employer is not an essential element of the [employer's] breach...

That is the principle that governs the present case. There is implied into the employment contract of these parties a term that the employer would not conduct itself in a way that, when objectively viewed, was likely to destroy or seriously damage the degree of trust and confidence that the plaintiff was reasonably entitled to have in his employer.

I hold that the employer was bound by an implied term of the contract to act reasonably when it exercised its right to dismiss the plaintiff. I hold that it was bound further not to conduct itself in a way that, objectively viewed; was likely to destroy or seriously damage the degree of trust that the plaintiff was entitled to have in the second defendant as his employer."

The plaintiff says the power of the General Manager to dismiss is not questioned. It is the procedure that he must follow and whether he has followed it correctly or not. Refer to paragraphs 4.2 to 4.9 of the plaintiff's closing submissions dated 29/4/09.

Further the reference in paragraph 3.4 of the defendant's submission to Chief Inspector Helepiko's letter is incomplete. Paragraph 2 of that letter makes the point clear-

"All the witness and evidence in connection with the theft is not sufficient to be used to accuse anyone or to issue etc..." (underlined by Counsel)

Crucial Issues for Determination

With respect there is a misconception in the defendant's submission on the two fundamental issues i.e.

(i) Whether the plaintiff embezzled the cash and

(ii) Whether the plaintiff was negligent and as a result caused the money to go missing?

If these issues are not relevant then what was the reason for the plaintiff's dismissal? Was she being dismissed for the missing money or for the November and December 2007 shortages in stock for which she was already punished? Alternatively was she being dismissed for both reasons relating to shortages in stock and for the missing money?

If the dismissal is based on any one of those grounds, it is submitted the dismissal was wrong. Refer paragraphs 4.2 to 4.9 of plaintiff's closing submissions dated 29/4/2009.

The conduct of the defendant falls under the categories of unreasonableness described by Finnigan J. in Koloa v Helu (supra) and by Lord Greene in - Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223.

In the latter case Lord Greene was classifying and defining what constituted unreasonableness in exercising a statutory discretion. At page 229 paragraph 2 the Justice said-

It is true the discretion must be exercised reasonably. What does that mean? Lawyers familiar with the phraseology commonly used in relation to the exercise of statutory discretion often use the word "unreasonable" in a rather comprehensive sense.

It is frequently used as a description of the things that must not be done. For instance, a person entrusted with discretion must direct himself properly in law. He must call his own attention to the matters which he is bound to consider.

He must exclude from his consideration matters which are irrelevant to the matter that he has to consider.

If does not obey those rules, he may truly be said, and often is said, to be acting "unreasonably."

Towards the end of the same paragraph, Lord Greene continued:

"Warrington LJ, I think it was, gave the example of the red-haired teacher, dismissed because she had red hair. That is unreasonable in one sense. In another sense it is taking into consideration extraneous matters. It is so unreasonable that it might almost be described as being done in bad faith."

It is noted that Lord Greene in the Wednesbury case was dealing with the application of "reasonableness" in relation to the exercise of statutory discretion which is not the issue in the present case. However when the General Manager exercised the power of dismissal over the plaintiff and relies on any of the following grounds for dismissal i.e.

On the shortage of stock in November and December 2007, OR

On both the shortage of stock and missing money OR

On the missing money only

That decision would be offensive or unreasonable for the reasons already submitted.

It is submitted that the defendant has misunderstood the point of unfair treatment of the plaintiff. The submission is directed towards the question of damages on unreasonable treatment referred to by Finnigan J. in Koloa v Helu (supra).

The reference to Public Enterprise was made because the defendant repeatedly described or referred to the defendant as a private company registered under the

Companies Act. The plaintiff's pleadings and submissions are clear as to the grounds for the wrongful dismissal.

Further the status of the defendant as a public enterprise is defined by law.

Damages

Whether the claim is for $25,000.00 or $5,000.00 or $20,000.00 the defendant will still incur costs in defending it. The attitude of the defendant is expressed very clearly in its submissions particularly paragraph 4.2 where it is submitted:

"It is not for the plaintiff or this Honourable Court to question the fairness or appropriateness of Paula Taumoepeau's decision to dismiss the plaintiff.

The only relevant factor is that he followed the guidelines in the conditions of Service Manual and acted within the scope of his authority in deciding to dismiss her".

It was submitted that there were other occasions of discussions where the defendant made it clear that settlement was out of the question.

The claim is not limited to general damages for wrongful dismissal only but also includes a claim for distress and humiliation and for her unreasonable treatment and stigma of dishonesty.

In addition the plaintiff is seeking payment of her pension including the defendant's contribution under the superannuation fund.

The defendant repudiated the employment contract by virtue of the wrongful dismissal. As a result it is not open for the defendant to shelter under the umbrella of 3 months notice stated in the Conditions of Service Manual. The defendant could have given 3 months notice - but it elected not to do so.

Conclusion

Based upon the evidence presented in this case - that is to say -both the oral and written evidence: - submitted by both parties.

I find and accept the following:-

• That there was a valid contract of employment in existence, between the parties in this case — that is to say existing between the plaintiff and the defendant company.

• A contract of employment - has been adequately evidenced by the plaintiffs working record- with the defendants company over a considerable period of time [five years and one month's duration] with the plaintiff working in an office — and holding certain responsibilities and obligations

• The terms and the conditions of the plaintiff's employment are in my view contained in and fully documented - in the Conditions of Service Manual produced to this court - in defence bundle as EXHIBIT A. The Conditions of Service in my view, form part of the plaintiffs contract of employment and I believe she had full knowledge of them.

• It was admitted that the plaintiff was the defendant company's senior employee [at all material times] and was employed as the Officer in Charge of the defendant's duty free shop at the Fua'amotu International Airport in November and December 2006.

• As the OIC at Pua'amotu International Airport the plaintiff was responsible for the day to day management of the duty free shop - and its day to day running - coupled with duties concerning the supervision of locally employed staff.

• The plaintiff by her contract of employment- was responsible for the security and safety of all stock - and all money on the premises belonging to her employer - with a duty to account for same.

• I find as a fact on the evidence before me- that during the tenure of the plaintiff's employment in November and December 2006 that there were two incidents of stock shortages in both November and December 2006 and I was told in evidence that stock shortages were a normal occurrence within the industry.

• The stock shortages at Fua'amotu International Airport occurring in November 2006 - was in the sum of $393.80

• The stock shortage at Fua'amotu International Airport occurring in December 2006 was in the sum of $1919.00.

• The total shortages at Fua'amotu International Airport amounted to $2312.80 — and the OIC the plaintiff - was responsible for those shortages and had a duty to account for same.

• On the evidence - I find as a fact the Plaintiff repaid - monies from the two stock shortages for the months of November in the sum of $393.80 and December 2006 in the sum of $1919 to her employer. Though in my view the plaintiff should -have been heard on a proper affordable payment schedules - under the heading or guise of "Rules of Natural Justice."

• I find as a fact the plaintiff was penalized by her employer in the following manner. The plaintiff was suspended for 2 weeks without pay — further:-

i) The plaintiff was demoted.

ii) The plaintiff was demoted by seven [7] pay increments thus the plaintiff argues- $3,028.00 was deducted from her salary.

iii) The plaintiff was receiving $11,544.00 per annum and her salary was reduced to $8,516.00 (reduced by a quite significant amount)

• On the evidence before me-I find as a fact the plaintiff- was significantly penalized for stock shortages at the airport during the months of November and December 2006.

• I find as a fact that in accordance with the terms of the procedures set out in the Conditions of Service Manuel - the GM DW1 conducted an internal investigation into the loss of money $7,112.00- and stock shortages - BUT was his investigation into these shortages properly documented - and was it fair? Should the investigation have been delegated to another member of staff?

• The GM - DW1 reported the loss of takings of $7,112.00 to the police as he is perfectly entitled to do - and in my view he should do — as would any prudent manager, or employer in his position.

• I accept the defendant companies Manuel of Conditions of Service - do not require DW1 to wait for the result of the police enquiry - before dismissing the plaintiff, - however, perhaps with hindsight- it would have been reasonable and prudent for the GM - DW1 to have waited for the police report - before he terminated the plaintiffs employment with the company — more especially after she was a long term employee of 5 plus years employment.

• I accept DW1 as the GM - is and was perfectly entitled to make a decision that the plaintiff could not be trusted to perform her duties as the OIC of the Airports duty free store — but the question remains was the GM properly informed of all the facts - before he made his decision to dismiss the plaintiff— [who as I said before was a long term employee of the defendant company].

• As regards the stock shortages in November and December 2006 the GM - DW1 had in fact effectively demoted the plaintiff and he had clawed back the stock shortage loss - in other ways. This court is bound to ask could the GM not have found the plaintiff an alternative job within the organization - with less responsibility - whilst he awaited the result of the police investigation before he dismissed her. After all he said in evidence had the police report come back before he took his decision he would NOT have dismissed the plaintiff.

• The court accepts the fact that there were stock shortages and these shortages were repaid by the Plaintiff. I say again the court was also told by DW1 shortages were an accepted practice in the industry and by repaying the shortages the company did not suffer any loss.

• Critically in this case — AND I find as a fact on the evidence and admissions — the takings [the money] and contents of the plastic bag on the 30th December 2006 in the sum of $7,112.00 were handed to Kivalu Tuiono by the plaintiff because I accept the plaintiff's evidence and the defence admission.

• I find as a fact that Kivalu Tuiono left the airport premises with the bag containing ALL the money [the $7,112.00] on the 30th December 2006— this finding of fact is based upon all the evidence before me.

• I heard no evidence from any source that the plaintiff had to accompany Kivalu in order to lodge the money [the takings] at the Head Office.

• There was no evidence presented to this court to rebut the evidence of the plaintiff that she and Emalita Ngungutau counted the $7,112.00 in the presence of Kivalu Tuiono, and placed it in the plastic bag and handed it to Kivalu to take away on the 30th December 2006 —and accordingly I accept the plaintiffs evidence in its entirety.

• Therefore I also find as a fact - the plaintiff cannot have been held responsible for the loss of the $7,112.00 therefore the plaintiff should never have been made to pay the sum of $7,112.00 back — this is essentially BECAUSE that loss — MUST lie elsewhere - most likely in the hands of Kivalu Tuiono - or others- at the company Head Office.

• Accordingly any deduction made by the defendant company covering the loss of $7,112.00 I rule was unlawfully deducted by the defendant company more especially because the money was deducted - prior to the conclusion of the ongoing police investigation.

In respect of the dismissal of the plaintiff from her post with the defendant company — I agree with Mr. Edwards — and I find as a fact the conduct of the defendant company in this particular case - falls under the categories of unreasonableness described by Finnigan J. in Koloa v Helu (supra) and Lord Greene in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223.

• Because it is true discretion must he exercised reasonably. In this case I find it was not.

• What does that mean?

• Lawyers familiar with the phraseology commonly used in relation to the exercise of statutory discretion often use the word "unreasonable" in a rather comprehensive sense.

• It is frequently used as a description of the things that must not be done, i.e. someone rushing to judgment.

• For instance, a person entrusted with discretion must direct himself properly in accordance with the law.

• He must call his own attention to the matters which he is bound to consider.

• He must exclude from his consideration matters which are irrelevant to the matter he has to consider.

• If does not obey those rules, he may truly be said, and often is said, to be acting "unreasonably."

• It is so unreasonable that it might almost be described as being done in bad faith.

• Should the GM have entrusted the investigation to another member of staff- my answer is yes. One cannot and should not be the investigator the judge and the jury.

Finding

I find for the Plaintiff in this case - today I intend to reserve determining the issue of damages - in the very distinct hope - that both parties may come to an agreement as regards to - future reemployment of this plaintiff in another post within the company.

I also wish to say on the facts of this case - the plaintiff cannot be regarded as DISHONEST by her actions. I totally reject that assertion - based upon hearing -all of the evidence.

For various reasons I have decided to adjourn this case to the 16th July 2009- for negotiations between the parties - to see if a settlement over the plaintiff's reemployment - might ensue - benefitting everyone.