|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Court of Appeal of Vanuatu |
IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
(Appellate Jurisdiction)
Civil Appeal Case No. 24 of 2005
BETWEEN:
VANUATU MARITIME AUTHORITY
Appellant
AND:
BANI TIMBACCI
Respondent
Coram: Hon. Chief Justice Lunabek
Hon. Justice Robertson
Hon. Justice Fatiaki
Hon. Justice Bulu
Hon. Justice Saksak
Counsels: Mr. Robert Sugden for the Appellant
Mr. John Malcolm for the Respondent
Hearing Dates: 8 & 16 November 2005
Judgment Date: 18 November 2005
JUDGMENT
This is an appeal against a decision of Justice Treston delivered in the Supreme Court at Port Vila on 13th September 2005 following a defended hearing which extended over 4 days and in which the Court reserved its judgment.
The Respondent's original claim was filed in November 2004 and sought damages for what the Respondent claims was his wrongful and unlawful dismissal by the Appellant Authority and evidenced by a termination letter delivered to him on 27th October 2003.
The Respondent in his claim sought liquidated amounts under various heads including breach of contract for a total sum of VT9,100,000, alternatively for termination without reasonable notice a total sum of VT6,300,000 in terms of his statutory rights under the Employment Act [CAP. 130]and under a third head which was described as a common law claim for damages for breach of an implied term in the employment contract. The Respondent also sought costs on an indemnity basis and interest of 10% per annum on any sum awarded.
The Appellant Authority in an extensive amended defence and set off sought to justify the summary dismissal of the Respondent for serious misconduct. The Appellant also sought to recover or set-off against any damages awarded to the Respondent, any loss which the Appellant Authority claims it suffered as a result of the Respondent's negligence and misconduct.
At trial the Appellant Authority called numerous witnesses with a clear intention of trying to make good on its set-off and claims of serious misconduct and, indeed, the record reveals that the Respondent was extensively cross-examined over several days. All of these came to nought when counsel for the Appellant Authority first abandoned the set off in the course of the hearing and then conceded liability in his written submissions. The basis of this concession is said to have occurred because the Acting Commissioner of Maritime Affairs had apparently misinterpreted or misunderstood the Appellant Authority's intentions at the relevant time which was to terminate the Respondent from his probationary acting position only and not from his employment with the Appellant Authority.
The judgment therefore proceeded on the basis of the Appellant's concession of liability and became one of determining or assessing the quantum of damages or compensation that was payable to the Respondent.
In summary, the trial judge awarded the Respondent the following sums:-
The trial judge also awarded the Respondent interest on the judgment sum at 5% per annum from the date of dismissal to the date of judgment together with costs on a standard basis up to the date of hearing and thereafter on an indemnity basis during the course of the hearing.
In arriving at his award, the trial judge made several findings which can be summarized as follows:
First, on a matter of law, the trial judge accepted and followed a judgment of the Honourable Chief Justice in Virelala v Air Vanuatu [1999] VUSC 15; Civil Case No. 029 of 1997 (1 April, 1999) in determining that, for the purposes of calculating the damages, the Respondent's contract was for a fixed term of 4 years duration which was more beneficial than the 3 years that the Appellant Authority claimed should be applied.
Secondly, the trial judge in awarding damages for breach of contract held, that it was based purely on the breach of contract of employment for the unexpired portion of the Respondent's 4 years contract, which was 24 months less 12 days.
Thirdly, for severance, he accepted that the remuneration figure which should be used in calculating the severance should be VT350,000 and not the figure of VT250, 000 which the Appellant Authority claimed was the Respondent's correct salary (excluding what counsel called a temporary acting allowance).
Finally, for common law damages, the trial judge found that the Respondent had been treated "abysmally and no doubt suffered distress and humiliation" as a result of the manner and circumstances of his dismissal and he awarded the Respondent a sum of VT750, 000.
The relevant factual circumstances are:
In that contract, the term was 4 years commencing on 15th October 2001. In addition to routine clauses, Clause 10 dealt with the Personnel Manual which figured prominently in the Appellant's submissions, Clause 11 dealing with suspension and a Clause 12 dealing with termination. We set out below the relevant parts of the Clauses.
"PERSONNEL MANUAL
SUSPENSION
11. (1) The employer may suspend the employment of the employee at any time if the employee has committed a breach of the terms and conditions of this agreement or the employer has reasonable grounds for suspecting that such a breach has occurred, and in either case to enable the employer time to consider what further action shall be taken with respect to the employee on a count of such breach or suspected breach.
(3) The suspension period cannot exceed one month. By that time, a decision will have to be made by the Commissioner either to dismiss the staff and if no complaint is lodged, to be reinstated with his full rights and be paid the outstanding salary.
TERMINATION
12. (1) The employer may terminate this agreement at any time without prior notice if the employee:
(a) commits any serious or persistent breach of any of the provisions of this agreement;
(b) is guilty of any grave misconduct or wilful neglect in the discharge of his duties including documented poor performance or neglect of assigned tasks".
"The calculation of 1 month per year per staff for the severance pay has already been introduced as agreed in the calculation of the provisions in the Budget's submitted to the Ministers of Finance and Infrastructure and has been in fact agreed upon and accepted when they accepted the budget.
This clause will be included in our staff manual which is not finalized yet"
There is a Circular Memo dated 10 January 2003 which was personally signed by the Appellant and others, acknowledging and accepting the severance allowance policy of the Respondent Authority stated above.
(i) incompetence in carrying out his responsibilities;
(ii) continual refusal to observe and comply with directions;
(iii) committing actions that had the potential of imposing serious legal implications and loss for the Appellant Authority; and finally,
(iv) conduct that caused the Appellant Authority to breach the provisions of the Vanuatu Maritime Authority Act.
Reference was also made in the termination letter to the provisions of section 50 of the Employment Act [CAP. 130] and to the fact that the Respondent had chosen not to attend the requested interview with the Appellant Authority and in doing so, gave the Appellant Authority no other alternative but to proceed in his absence.
Section 50 (1) of the Employment Act recognizes that an employee may be summarily dismissed without compensation and without notice in the case of serious misconduct. However, section 50 (4) requires an employer before dismissing an employee on the ground of serious misconduct to give the employee "an adequate opportunity to answer any charges made against him" and the section provides that any dismissal in contravention of this subsection "shall be deemed to be an unjustified dismissal".
The Respondent's suspension letter with the 4 grounds was extremely sparse and without any details as to dates, times or events. They were wholly inadequate and insufficient for the purposes of section 50 (4).
On the 2nd November 2004, almost a year later, the Supreme Court proceeding were commenced.
The Appellant Authority filed a comprehensive and extensive defence and set-off to the claim in which, for the first time, the particulars of alleged misconduct were disclosed. In particular there were allegations of alcoholism and what is described as the Hugh-Lowe-Southern Express incident in which the Respondent is alleged to have wrongfully cancelled a ship's engineer's and captain's certificate resulting in the rejection of an insurance claim by the vessel's owner who had lost his vessel at sea.
It is unnecessary to deal in any detail with the Appellant's defence, counterclaim and set-off as these were either abandoned or dropped during the course of the trial. The only question remaining for the trial judge by the conclusion of the trial was an assessment of damages.
The Appellant Authority now appeals against the entire judgment of the trial judge, in particular, against each of the heads under which damages, interest, and costs were awarded to the Respondent. Under each ground of appeal, are numerous particulars and details advanced as to how the trial judge erred either in law or in his factual findings.
As for the award of general damages for breach of Mr. Timbacci's contract of employment, Mr. Sugden challenged the legal basis upon which the award was made as well as the 4 years which was adopted as the applicable term of the contract and VT350,000 per month as the figure to be used in the calculations rather than VT250,000. Counsel also argued that the Respondent had failed in the proof of mitigation of loss which he had pleaded.
In this regard, the learned trial judge said:-
"While I accept that the Appellant might have obtained some alternative employment on his own admission after the dismissal, in my view that does not affect the award of damages which I am about to make. Furthermore the defence did not illicit any specific amounts that the claimant earned. In addition it was clear, as the claimant submitted, that there were no allegations either in pleading or at the trial that the claimant had failed to mitigate his loss.
The award of damages is based purely on the breach of contract of employment for the unexpired portion of the four year term... The damages must relate to the salary at the time of termination, namely VT350,000 per month. Under that contract of employment there remained available to the Appellant 24 months of employment less 12 days."
Mr. Sugden submitted that the judge was in error when sum awarded for general damages for breach of the contract was arrived at by merely calculating the earnings that would be received by the Respondent on a salary of VT350,000 per month over a period equal to the balance of the Respondent's contractual term. This, it was submitted, is not the proper method of calculating damages for wrongful dismissal and heavy reliance was placed on paragraph 653 of Halsbury's Laws of England (4th Edition) Volume 16.
The legal principles that guide a Court in the assessment of damages for wrongful dismissal are not in doubt and are conveniently summarized in paragraphs 933 & 934 of McGregor on Damages (13th Edition) at page 635. It reads:-
"The measure of damages for wrongful dismissal is prima facie the amount that the (Respondent) would have earned had the employment continued according to contract, subject to a deduction in respect of any amount accruing from any other employment which the (Respondent) in minimizing damages either had obtained or reasonably could have obtained. The rule has crystallized anomalously in this form. It is not the general rule of the contract price less the market value of the (Respondent's) services that applies; instead the prima facie measure of damages is the contract price, which is all the (Respondent) need show. This is then subject to mitigation by the (Respondent) who is obliged to place his services on the market, but the onus here is on the (Appellant) to show that the (Respondent) has or should have obtained an alternative employment.
Basically, the amount that the (Respondent) would have earned under the contract is the salary or the wages that the (Appellant) had agreed to pay". (para 934)
And later at para 937 is the following relevant passage:
"Strictly there should be a deduction in respect of the immediate payment"
With the above principles in mind, we turn then to consider the Appellant's submissions concerning general damages for breach of Mr. Timbacci's contract of employment.
1. CONTRACT DURATION
Counsel for the Respondent submitted that on the basis of the judgment of the learned Chief Justice in Jean Paul Virelala v Air Vanuatu (Operations) Limited [1999] VUSC 15; No. 029 of 1997 (1 APRIL, 1999), the trial judge was correct to use the term of the Respondent's contract with the Appellant Authority which was of four years for making the calculation. Alternatively, if the Court finds that Virelala was not to be followed then by virtue of section 15 of the Employment Act, the term of the contract would be reduced to one of three years.
Mr. Sugden submitted that the effect of s.15 is to render the contractual term for 4 years unlawful. Counsel submitted that the illegal duration should be struck out leaving a contract with no fixed term. Counsel was adamant that the term could not be reduced to three years to conform with s.15 of the Employment Act.
We have carefully considered the judgment of the learned Chief Justice in Virelala's case in which it was held, in part, that where there is a clash between s.6 and s.15 of the Employment Act, then s.6 would prevail as being the more specific. We respectfully differ from this aspect of the judgment. We hold that s.6 of the Employment Act is a general provision which preserves and recognizes the freedom of the parties to an employment contract to negotiate and agree terms.
Section 15 however is a very specific inhibition by Parliament on that freedom by restricting the duration of contract of employment. It may be thought that the purpose and object of s.15 is both protective and paternalistic, but the intention is clearly manifested and emphasized in the special additional restrictions in the proviso to the section. As we noted in Air Vanuatu v Molloy [2004] VUCA 17; Civil Appeal Case No. 19 of 2004 (4 November 2004) it does not prevent more advantageous condition than the Employment Act provides in other areas.
A simple purposive reading of s.15 means a term which is agreed by the parties in excess of three years is reduced to a term of three years. The parties bargain should be interfered with to the least degree possible under the law. Parliament placed no prohibition on term contracts but merely restricted their length in various situations.
This interpretation was what was applied by this Court in Pentecost Pacific Limited v Palene Hnaloane in [1980-1994] VLR 134 at page 144; [1984] VUCA 4. Without argument or discussion, the Court said:
"It must therefore be accepted that the contract in dispute was a contract for a definite period of which the term must be limited to 3 years in accordance with the provisions of Article 15 of the Employment Act of 1983."
We hold therefore that the relevant term or duration of the Respondent's contract for the purposes of calculating general damages is by operation of law, three years. The balance of the Respondent's contract term was therefore twelve months.
2. THE RELEVANT MULTIPLIER
The trial judge applied a salary rate of VT350,000 per month in his calculation of general damages. Counsel for the Appellant Authority submitted however, that the correct contractual salary was VT250,000 per month and that should have been used in calculating the damages.
The sum of VT350,000 per month adopted by the trial judge was the figure to which Mr. Timbacci's salary was temporarily raised whilst he was acting as Commissioner of Maritime Affairs for the probationary period of six months which was due to expire on the 27th of November 2003. If there was no extension of the probationary period or of the acting appointment his salary would have returned to a monthly rate of VT250,000.
Having assessed the evidence we hold that the applicable salary rate for the calculation of general damages for breach of the Respondent's employment contract, is, VT350, 000 for the month between the 27th of October 2003 and the 27th November 2003 and thereafter, for 11 months at the rate of VT250,000. We are not attracted to the argument that there should be uniformity between the figures used here and that used for calculating severance allowances,. They are quite independent and one does not affect the other. In light of his suspension and the Authority's dissatisfaction with Mr. Timbacci it is more likely than not that there would have been no extension of his acting appointment. A factual reality check has to apply.
3 The question of mitigation
We have set out above the observations of the learned trial judge on this issue. He was in error in recording that the matter was not pleaded. Paragraph 14 of the claim said "at all times since (his) unlawful dismissal, the Respondent has attempted to mitigate his loss." In the statement of defence this was denied. Mitigation of damages was clearly a live issue.
The only evidence from the Respondent was that elicited in cross-examination. The evidence is conveniently summarized in the response submissions of counsel for the Respondent which noted:-
"(a) Timbacci was arrested and imprisoned for driving the MV Rua Kaha from Santo to Vila to avoid a cyclone, the criminal charges was dismissed but the VMA cancelled his Captain's ticket in any event. This prevented his further employment.
(b) That he got a few months of temporary part time work with Total Fishing Services earning VT20,000 per month. In this latter regard we note that from 11th March 2004 to the 24th September 2004, the Respondent was writing letters to the Appellant Authority requesting various endorsements on the letter head of the Rua Kaha. We also note recorded in the hand written transcript of the primary judge an entry at page 37 which reads "In December 2004, I'm still working on Rua Kaha? Yes."
It would therefore appear that the Respondent obtained employment for the period from at least early March 2004 until December 2004. Counsel for the Appellant Authority submitted that the evidence was wholly inadequate for a proper assessment of the figure that should be deducted in mitigation from the general damages awarded for breach of the Respondent's contract of employment.
We accept that there was a regrettable failure to focus on this critical issue whereas extraordinary time and effort was expended on matters which were of no probative value. We could send the matter back for further trial on this point or we could adopt Mr. Sugden's argument that Mr. Timbacci should get only nominal damages because of inadequate proof especially as to what he did, or reasonably could have done, to earn for himself.
We are unwilling to do either. The starting point is what he would have earned if there had not been an unjustifiable termination. That is VT3,100.000 which is 1 month at VT350, 000 and 11 months at VT250, 000. Mr. Timbacci worked from March 2004. His failure to obtain employment from October 2003 until then is not unreasonable. For the next 7 months we estimate an earned benefit of VT50,000 per month. This is on the basis that as well as some actual wages he would have had the benefit of accommodation and keep. VT2,750,000 is accordingly the sum which we award for the breach of contract
4 SEVERANCE
There is no question that a severance allowance was payable to the Respondent for his wrongful dismissal. Section 56 of the Employment Act provides:
"56. (1) Subject to the provisions of this Part, the amount of severance allowance payable to an employee shall be calculated in accordance with subsection (2).
(2) Subject to subsection (4) the amount of severance allowances payable to an employee shall be -
- (a) for every period of 12 months -
- (i) half a month's remuneration, where the employee is remunerated at intervals of not less than 1 month; ...
(5) Any severance allowance payable under this Act shall be paid on the termination of the employment.
(6) The court may, where it thinks fit and whether or not a claim to that effect has been made, order an employer to pay interest, at rate not exceeding 12 per cent per annum from the date of the termination of the employment to the date of payment.
(7) For the purposes of this section the remuneration which shall be taken into account in calculating the severance allowance shall be the remuneration payable to the employee at the time of the termination of his employment."
It is clear from the facts in this case and s.56 (2) that the relevant statutory rate for the payment of severance allowance is 'half a months remuneration' for every twelve months period of continuous employment. The rate however which the trial judge adopted in this case was 'one month salary per year' and this was done on the basis of the trial judge's finding that the Appellant Authority recognized that staff members were entitled to severance allowances at the rate of one month salary per year.
It is common ground that the only evidence produced by the Respondent in support of this claim or this rate is to be found in an Inter Office Memorandum dated the 18th December 2002 issued by the then Commissioner of Maritime Affairs to staff and entitled severance allowance and a circular memorandum issued by the Appellant Authority dated the 10th January 2003 to several named staff member. The Circular Memo bears the signature of the Respondent.
Counsel for the Appellant Authority submitted that the only way that the rate of severance allowance could be changed was through a variation of the personnel manual which is referred to in Clause 10 of the Appellant's contract of employment and not otherwise.
There can be no doubting after the judgment of this Court in Air Vanuatu (Operation) Limited v Keith Molloy [2004] VUCA 17; Civil Appeal Case No. 19 of 2004 (4 November 2004) that the parties to an employment contract may negotiate and agree a severance allowance rate higher than that provided for in the s.56 (2) of the Employment Act. The question then is does the Inter Office Memorandum and Circular Memo constitute an agreement to vary the severance allowance rate by increasing it from the statutory rate of half a month salary to a month salary? Or are they mere documents outlining a future policy of the Appellant Authority and unsupported by any consideration and therefore incapable of amounting to an enforceable agreement to vary the severance allowance rate.
Having considered the competing submissions, we are satisfied that the documents do collectively constitute an enforceable agreement varying the severance allowance rate for the employees of the Appellant Authority. We note that under Clause 10 of the Respondent's contract of employment the Appellant Authority could unilaterally alter the terms of the contract by varying the personal manual. Despite counsel's forceful submissions to the contrary, we are not persuaded that the Respondent's contract of employment can only be varied through Clause 10.
Counsel for the Appellant Authority also challenges the remuneration rate which should be adopted for the purposes of calculating the Respondent's severance allowance. In this regard counsel submitted that the Respondent's correct remuneration was VT250,000 per month and not the VT350,000 per month which the trial judge utilized in calculating the severance allowances.
S.56 (7) of the Employment Act provides that for the purposes of this section, the remuneration which shall be taken into account in calculating the severance allowance shall be:
"The remuneration payable to the employee at the time of the termination of his employment."
It is common ground that the Respondent's remuneration or salary at the time of his termination on the 27th October 2003 was VT350,000 per month. We also note in this regard that paragraph 13 of the Respondent's claim which sets out the Respondent's salary at the date of his dismissal at VT350,000 per month, is admitted and accepted in paragraph 10 of the Appellant Authority defence. There is no merit at all in Mr. Sugden's suggestion that the lesser figure of VT250,000 was the relevant 'remuneration' at the time of the Respondent's termination and we have no hesitation in rejecting it. Accordingly we uphold the assessment and award of the learned trial judge for severance allowance.
COMMON LAW DAMAGES
In this regard, the trial judge on his view of the evidence was satisfied that there was ample justification for an award of common law damages for the distress and humiliation suffered by the Respondent as a result of the manner in which he was dismissed and which he described as:
"arbitrary, capricious and unacceptable and clearly breached the trust and confidence that should exist between an employer and an employee."
Mr. Sugden submitted however, that contrary to the trial judge's findings and assessment, the Respondent was treated with dignity and consideration from the beginning of his suspension for misconduct until his eventual termination. In the circumstances, Mr. Sugden forcefully submits that the present appeal is easily distinguishable from the circumstances prevailing in the case of Melcoffee Sawmill Limited v George [2003] VUCA 24; Civil Appeal Case No. 18 of 2003 (7 November 2003) where the Court of Appeal awarded the dismissed employee the sum of VT30,000 by way of damages for the manner of his dismissal which, in that case, included the use of abusive language.
We accept Mr. Sugden's submissions in this regard and note in particular that the trial judge nowhere explains how he arrived at the figure of VT750,000 which we consider to be on the high side.
Having said that we accept that the following circumstances warrant and justify an award of damages to the Respondent:
During the hearing of the appeal Mr. Sugden was forced to accept an award which was closer to that in the Melcoffee case could not be complained of. He was anxious that an award should reflect only the narrow issue of the means of dismissal and not wider hurt or humiliation.
In all the circumstances we are satisfied that the appropriate award for damages for the manner in which the Respondent was summarily dismissed is a sum of VT50,000.
INTEREST
In his statement of claim, the Respondent claimed interest on damages at the rate of 10% per annum. The trial judge in his judgment awarded interest at 5% on the judgment sum from the date of dismissal to the date of judgment without any attempt to differentiate between the various heads of damages awarded.
In the latter regard, we adopt the rate of 5% however, we differentiate between the various heads as follows:
COSTS
The Respondent in his statement of claim sought costs on an indemnity basis. The trial judge in his judgment awarded costs as follows: "Costs in favour of the (Respondent) against the (Appellant Authority) on a standard basis up to the hearing and on an indemnity basis during the course of the hearing as agreed or as determined by the Court." Mr. Malcolm for the Respondent sought to support the trial judge's award by referring to various offers to settle which were ignored by the Appellant Authority. We are satisfied however, that such offers go to the interest awarded and not to the costs. We are satisfied that there were always significant matters which needed to be litigated between the parties.
We are not satisfied that this was a case which warranted an award of indemnity costs in general and the trial judge provided no reasons although plainly he would have been concerned at the inordinate amount of time which was taken up unnecessarily on liability and counterclaim matter which were eventually conceded somewhat belatedly.
Counsel before us accepted that the effect of the Supreme Court orders would have been a costs award in the vicinity of VT3,000,000. We are satisfied that in all of the circumstances that is not justified.
The award of indemnity costs is disallowed and in its place we fix costs at VT1,500,000 payable to the Respondent in respect of the trial in the Supreme Court.
A final issue which was covered at length in written and oral argument by counsel for the Appellant, can generally be described as suggestions that there was not a fair trial because of the approach of the trial judge.
Mr. Sugden accepted that he did not raise this in the Supreme Court. Counsel must always ask a judge to recuse himself if they want to advance such an argument on appeal. Further before us Mr. Sugden accepted when the appeal had been refined and its essentials focused upon, there was nothing which went to the substance of the fundamental issues we had to determine. Accordingly there is no gain in our pursuing this point further.
In so far as the appeal in this Court is concerned we make no order as to costs which will lie where they fall.
The appeal is accordingly allowed and the operative orders are:
Dated at Port Vila, this 18th day of November 2005.
BY THE COURT
Chief Justice Lunabek
Hon. Justice Robertson
Hon. Justice Fatiaki
Hon. Justice Saksak
Hon. Justice Bulu
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/vu/cases/VUCA/2005/19.html