IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)
 
CIVIL APPEAL CASE No.19 of 2001
 
BETWEEN:
 
VANUATU NATIONAL PROVIDENT FUND BOARD
Appellant
 
AND:
 
PAULA ARUHURI and Others
Respondents
 
Coram: Hon. Chief Justice Vincent Lunabek
Hon. Justice Bruce Robertson
Hon. Justice John von Doussa
Hon. Justice Daniel Fatiaki
 
Counsel: Mr. F.J. Purnell and Ms Loa Damena-Tepai for the appellant
Mr. Mark Hurley for the respondents
 
Date of hearing: 31 October 2001
Date of judgment: 01 November 2001
 
JUDGMENT
 
The 12th January 1998 will be a day long remembered in the history of Port-Vila and of the appellant Board and its employees. That was the day when an unruly mob numbering between 300 and 500 people laid siege to the Vanuatu National Provident Fund (VNPF) building in downtown Port-Vila armed with sticks, stones and metal pipes and weapons and projectiles. It is not entirely clear how long it lasted, but, for over several hours, the mob vented its collective frustrations and anger on the VNPF building and despite the presence of police force members at the scene, outer doors and almost all windows and some internal partitioning of the building were shattered by flying projectiles. Employees of the appellant including sixteen (16) of the respondents who were working in and around the building at the time were severely traumatized by the experience. It is pure good fortune that no one was seriously injured.
 
When the crowd was eventually dispersed all three floors of the VNPF building had sustained damage in varying degrees which the building insurers assessors estimated could cost 12,000,000 VT to repair and/or replace including 170 panes of window glass; several doors; a large number of internal gyprock and vinyl wall panels and internal partitioning; suspended ceiling panels and a skylight on the top floor.
 
The dispersing crowd then moved on to other business premises in Port-Vila causing severe damage to buildings and stock and contents were looted. A police truck was upturned and set alight and tear gas was used to further disperse the mob. So dangerous and volatile was the situation that a State of National Emergency was declared the following day and a limited curfew was imposed in Port-Vila and Luganville.
 
The situation at the Luganville offices of the VNPF was not much better although there was no actual rioting or serious damage done to the building premises. Nevertheless the three (3) staff members were faced with an angry hostile mob which numbered about 800 people who had gathered outside the building that housed the appellant’s offices and had remained there until late in the afternoon.
 
The learned trial Judge observed that ‘its is probably through a mixture of good fortune and the skill of Major Aru and Inspector Boe that the staff in Luganville were not subject on the 12th January to the same fate as their colleagues in Port-Vila. However there was a period when they were in the building with a hostile crowd outside, there was no senior managerial directive or plan, no contingency plan for their evacuation, indeed they were virtually on their own. In these circumstances, an award of damages should be made…’
 
In respect of the Luganville employees it was common ground that their safety was never seriously considered or discussed by the appellant Board at its meetings leading up to the 12th January 1998.
 
On 27th September 1999 the respondents issued proceedings against the appellant claiming damages under various heads including breach of statutory duty; breach of an implied term in the contract of employment; and breach of a common law duty of care. The appellant by its solicitors filed a Statement of Defence on 31st May 2000 denying liability and pleading in the alternative contributory negligence and ‘volenti non fit injuria’.
 
At the trial of the action nineteen (19) respondents testified and medical evidence of each was adduced before the trial Judge. The appellant Board also called several witnesses including a Board member, members of the VMF and regular police force and the Deputy General Manager at that time.
 
It is unnecessary to canvass in any great detail the trial Judge’s judgment in so far as, for various reasons, more fully set out in his judgment, the trial Judge rejected a large part of the respondent’s evidence and complaints and awarded damages for breach of an implied term of the contract of employment and breach of a common law duty of care.
 
The VNPF has appealed against the trial Judge’s finding of liability and the damages awarded advancing numerous grounds. We have been assisted by the comprehensive written and oral submissions of counsels.
 
In summary this appeal may be reduced to the following two (2) issues:
 
(1)               whether or not the learned trial Judge was correct in his finding of liability; and
 
(2)               whether damages were properly awarded and the legal basis for such an award.
 
A number of subsidiary matters were raised in the written submissions but were not pressed in oral argument. We consider those matters are without merit and do not require further discussion.
 
As to (1) above counsel for the appellant forcefully argued that the Board had discharged both its statutory and common law duties owed to the respondents. Counsel asks rhetorically ‘how could an evacuation plan have made the slightest difference to an event which was unforeseen namely the riot?’ When pressed however, counsel had difficulty explaining why the riot that in fact occurred was not a foreseeable possibility having regard to the events over the days preceding the riot.
 
Lord Brandon in McDermid v. Nash Dredging Ltd (1987) 2 All ER 878 at 887 speaking of the legal responsibility of an employer towards it‘s employees said:
 
“…the relevant principle of law can be divided into three parts. First, an employer owes to his employee a duty to exercise reasonable care to ensure that the system of work provided for him is a safe one. Second, the provision of a safe system of work has two aspects: (a) the devising of a system; and (b) the operation of it. Third, the duty concerned has been described alternatively as either personal or non-delegable… The essential characteristic of the duty is that, if it is not performed, it is no defence for the employer to show that he delegated its performance to a person, whether his servant or not his servant, whom he reasonably believed to be competent to perform it. Despite such delegation the employer is liable for non-performance of the duty’.
 
The learned trial Judge deals with this first issue in the following passages in his judgment. He said:
 
“It is in issue that tension was rising in the early days of January 1998 and that there were major security concerns. By the nature of the ‘Micro Loan Scheme’ and its widening to all members it was inevitable the Fund, its building and staff would become the focus of a large number of people (the members) seeking return of their money. That was against the background of the fear (well founded or not) that monies had been wrongly dissipated and there might not be enough to pay back all the members.
 
The mounting tension was being discussed by the Board and was clearly in the minds of the Chairman and General Manager. Police and VMF assistance was obtained, complaint was made about the adequacy of police action, a Court order was obtained and private security firms were engaged.
 
Whilst a full scale riot might not have been foreseen, it is clear the defendant foresaw the high risk of serious civil disturbance and the fact that that disturbance would be focus on its building and its staff. In the few days before the 12th January both in Port-Vila and Luganville staff were working “flat-out” to distribute and process forms. Tents were erected outside the Vila building to facilitate this. Members seeking repayment were becoming demanding, abusive and angry towards the Fund’s staff who were dealing with them.
 
However, care must be taken to ensure findings are not made ‘with the benefit of hindsight’. I find it was reasonably foreseeable that a serious disturbance could occur and that the focus of that disturbance would be the fund’s building and its staff. The location of the Fund’s building was known to all, and the fund’s staff were easily identifiable by their uniforms.
 
The Fund took the measures set out above. They were clearly aimed at security outside and around the building both in Port-Vila and Luganville. There is no evidence of any special instruction issued to staff as to what to do if a disturbance should break out. There was no prior identification of anyone (staff or security officer) in the building who would be in charge of and responsible for staff, where they should go, what they should do, how they would be protected and then evacuated from the building. In particular, for the purposes of evacuation and concealing identity how staff should dress. The simple expedient of instructing staff to go to and from work in ordinary clothes and change at work would have assisted and meant every member of staff had a set of ordinary clothes at work.
 
In the event it was the quick thinking and courage of security officers Nato Tawia and Willie Kaloris that saved the plaintiffs from physical injury, (save for Maxime Charley).
 
I find that in the unusual circumstances of this case it was foreseeable that the ‘working conditions’ of these plaintiffs could become dangerous and they did. Whilst the Fund was not in a position to remedy the condition as such by stopping the riot they were in a position to reduce or abate the effects of the riot upon the staff by the prior formulation and promulgation to staff of instructions and a plan as to what to do. This they failed to do. The fact there would be and were police and VMF outside the building to deal with disturbances and some security officers outside or inside did not mean the Fund could leave the matter there.
 
Luganville is much smaller than Port-Vila. There were only three staff there. For these reasons the individual pressure upon these plaintiffs and their feeling of isolation and vulnerability must have been greater. They each describe the aggressive and abusive treatment they received from Fund members in those days. Their house and families were subject to threats as well.
 
It must be to the credit of Major Aru and Inspector Boe that no major disturbance took place, and only one or two windows were broken. Major Aru give evidence of the patrols he sent out to look after the staff homes and the Fund building although this did not stop the threats and abuse and the need to temporarily move home.”
 
Having ourselves carefully considered the evidence led before the trial Judge much of which was common ground, including the appellant’s concession ‘that the events of 12th January were very frightening and necessarily could give rise to upset for some time and bad memories which would fade but probably not go away,’ we are not persuaded that the trial Judge erred either in his specific finding findings or in his conclusions about the evidence. This was a case that called for the application of a measure of common sense and we detect no error in the trial Judge’s determination of this aspect of the case. The appeal against liability is accordingly dismissed.
 
We turn next to address the second issue in the appeal which was only obliquely raised by counsel for the appellant as a causation and a ‘de minimis’ argument.
 
The learned trial Judge deals with his award of damages in the following manner: firstly, he found that ‘in the unusual circumstances of the case it was foreseeable that the working conditions of the (respondents) could become dangerous and they did. The appellant was in a position to reduce or abate the effects of the riot upon the staff by the prior formulation to the staff of instructions and a plan as to what to do. This (the appellant) failed to do.”
 
Additionally the trial Judge noted that the room the staff was taken to (in the VNPF building at Port-Vila) ‘(had) no windows, no air conditioning or ventilation and it was crowded. They were there for a considerable time, knowing there was a riot going on outside and it was partly directed at them. Prayers were said.’ By all accounts the respondents were held-up in the room for 2-3 hours. The trial Judge found as much.
 
Then in this judgment the following important passage occurs where he says:
 
‘All (respondents) describe the whole incident as terrifying and frightening. Several feared for their lives. I accept that evidence. There would have been a short time of fear after the riot started until any prearranged plan would have been put into action. However I find the failure to issue contingency instructions and have any plan available greatly contributed to the measure of fear and fright felt and the duration of it.
 
Whilst no employee was physically hurt and no specific sum is claimed under these heads, (i.e. a failure to have in place an evacuation plan and holding the respondents in an inadequate room for approximately three hours) I find the plaintiffs are entitled to damages for the consequences of the defendants failures as set out above. I award them damages for breach of the implied contractual term and common law duty.’
 
In this latter regard we find (although not raised by counsel) that the trial Judge erred in purporting to award damages for terror and fright arising out of the appellant’s breach of a common law duty of care in the absence of a clear finding of any recognizable psychiatric injury’ suffered by any of the respondents. See Jaensch v. Coffey [1984] HCA 52; (1984) 155 CLR 549. This much was responsibly conceded by counsel for the respondent who thereafter sought to support the trial Judges award on the basis of the appellant’s breach of an implied contractual term that the appellant ‘would at all times take all necessary steps to ensure the health, safety and welfare at work of each (respondent)’.
 
On one view and on a narrow reading it may be said that a contract of employment is simply one in which an employee agrees that in consideration of a wage or other remuneration, he will perform some service or work for his employer. We are satisfied however that a contract of employment in this day and age in Vanuatu is more than that. Undoubtedly a general legal relationship exists between an employer and employee but it is a relationship in which the law, both common law and to a significant extent statute, imputes several rights and responsibilities to each side. For instance Section 2 of the Health and Safety at Work Act [CAP.195] imposes a non-delegable statutory duty on ‘every employer to ensure, so far as is reasonably practicable, the health safety and welfare at work of all his employees’.
 
Accordingly we are satisfied that a contract of employment and the relationship of employer and employee is a special relationship where the very nature of the relationship imposes a duty on the employer to ensure the health (both physical and mental), safety as to the place, equipment and system of work provided and welfare of employees. This latter duty has not been the subject of interpretation but in our view must include a duty to consider and address the concerns of employees before inanimate objects; a duty to warn employees and to provide information, instruction, training and supervision; and the maintenance of a safe means of ingress and egress from the work place to name but a few.
 
In the case of Haynes v. Dodd (a firm) (1990) 2 All ER 815, a commercial contract case for the purchase of a leasehold on an incorrect assurance that the premises had a right of way, Staunghton LJ said at p.824:
 
“It seems to me that damages for mental distress in contract are, as a matter of policy, limited to certain classes of case. I would broadly follow the classification provided by Dillon CJ in discussing the basis for an award of damages for mental distress in Bliss v. South East Thames Regional Health Authority (1987) ICR 700 at 718.”
 
“…where the contact which has been broken was itself a contract to provide peace of mind or freedom from distress…. It may be that the class is somewhat wider than that. But it should not, in my opinion, include any case where the object of the contract was not comfort or pleasure, or the relief of discomfort, but simply carrying on a commercial activity with a view to profit.”
 
In Watts v. Morrow (1991) 4 All ER 937, a negligent surveyor case, Bingham LJ said at p.859:
 
“A contract-breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation tension or aggravation which his break of contract may cause to the innocent party. The rules is not, I trust, founded on the assumption that such reactions are not foreseeable, which they surely are or may be, but on considerations of policy. But the rule is not absolute. Where the very object of a contract is to provide pleasure, relaxation, peace of mind, or freedom from molestation, damages will be awarded if the fruit of the contract is not provided, or if the contrary result is procured instead. If the law did not cater for this exceptional category of case it would be defective.
 
In cases not falling within this exceptional category, damages are, in my view, recoverable for physical inconvenience and discomfort caused by the breach and mental suffering directly related to the inconvenience and discomfort… But I also agree that awards should be restrained…’
 
The law has been similarly expounded in Australia in Baltic Shipping Co. v. Dillon [1993] HCA 4; (1993) 176 CLR 344. At 365 Mason CJ (with whom Toohey and Gaudron JJ agreed on this aspect) said:
 
“…it is preferable to adopt the rule that damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by breach or unless the contract is one the object of which is to provide enjoyment, relaxation, or freedom from molestation. In cases falling within the last-mentioned category, the danger flows directly from the breach of contract, the promise being to provided enjoyment, relaxation or freedom from molestation. In these circumstances the Court is not driven to invoke notions such as ‘reasonably foreseeable’, or ‘within the contemplation of the parties’ because the breach results in failure to provide the promised benefit”.
 
McHugh J at 405 said the law should recognise that damages for distress or disappointment are recoverable in an action for breach of contract if it arises from breach of an express or implied term that the promisor will provide the promisee ‘with pleasure or enjoyment or personal protection or if it is consequent upon the suffering of physical injury or physical inconvenience’.
 
We respectfully adopt the above statements as correctly reflecting the legal basis for the learned trial Judge’s award of damages to the respondents in the present case.
 
In the present case the terrifying and frightening episode for which the award of damages was made was consequent upon physical inconvenience. Further, the implied term of the contracts of employment required the employer to provide the employee with personal protection to avoid molestation from irate and angry clients. On both scores the plaintiffs were in law entitled to recover damages for breach of contract for the fear and distress they must have experienced on 12 January 1998.
 
We recognize however that the quantification and assessment of damages in this area must necessarily be in general global terms. We note that both the Employment Act [CAP. 163] and the Health and Safety at Work Act [CAP 195] provide for a maximum ‘fine of 100,000 VT’ for any contravention or breach of the statutory duties imposed thereunder. Viewed in that context and mindful that the learned trial Judge has not sought to explain the difference in the amounts awarded to the Port-Vila and Luganville employees of the appellant, we consider that on principle, the damages awarded for both sets of employees ought to be modest and the same. Accordingly we reduce the award for the Port-Vila employees to 100,000 VT each.
 
The Orders of the Court are:
 
1.                  The appeal is allowed as to the quantum of the damages awarded.
2.                  The damages awarded to each of the Port-Vila respondents is reduced to 100,000 VT.
3.                  There will be no order as to costs on the appeal. The order as to costs of the trial made by the trial Judge remains.
 
DATED at PORT-VILA, this 1st DAY of NOVEMBER, 2001
 
ON BEHALF OF THE COURT
V. LUNABEK CJ