Kalangis v Vanuatu Internal Air Services (Vanair) Ltd [2001] VUSC 31; Civil Case 020 of 2000 (9 April 2001)

IN THE SUPREME COURT OF

THE REPUBLIC OF VANUATU

HELD AT PORT VILA

Civil Jurisdiction
Civil Case No. 20 of 2000

BETWEEN:

KARL KALANGIS
Plaintiff

AND:

VANUATU INTERNAL AIR SERVICES (VANAIR) LIMITED
Defendant

Mr. Morrison for the Plaintiff
f
Mr. Hurley for the Defendants

JUDGMENT

Vanair Ltd, the defendants, are the internal airline of Vanuatu. On 22 January 1998 the plaintiff and the defendants signed a contract. That contract agreed that the defendants would employ the plaintiff as Personnel and Administration Manager for a period of three years. Various terms were set out, but none for termination or notice. There was no term concerning misconduct. However, section 50 (1) Employment Act (Cap 160) allows an employer to dismiss an employee without notice and without compensation in lieu of notice for serious misconduct.

The claim is made for breach of that contract. The plaintiff says the defendants terminated it before the end of the three years. The defendants alleged five instances of serious misconduct and counterclaim for monies mistakenly paid on termination to the plaintiff. In his defence to the counterclaim the plaintiff challenged this, alleged procedural irregularities and averred any payments were made with the full knowledge and understanding of the defendants.

The plaintiff himself and Reynold Boeson gave evidence. For the defendants Hanna Liu and Marakone Alilee gave evidence.

The plaintiff set out his previous work history and managerial experience. He agreed he was in a position of trust. He was instrumental in preparing and compiling the staff handbook.

It is agreed that the defendant was terminated and paid in accordance with Vanair’s letter of 7^th October 1999.

I will consider the five alleged instances of serious misconduct in turn.

1. Fuel Allowance

The plaintiff said he was entitled to fuel allowance when he used his own vehicle on Vanair’s business. Section 2.5 of the handbook permits this upon presentation of receipts. No receipts were available when investigation into this commenced. The plaintiff then produced a series of consecutively numbered receipts to cover the payments to him in respect of fuel. He accepted they had all been made out at one time after questions were raised. He said he had used cheque stubs to remember the dates and amounts. Those stubs were neither disclosed documents nor produced to the court.

At one stage the defendant appeared to be saying there was a flat allowance of Vt15,000 per month, for which receipts were needed. From the face of the “receipts” produced repayments had apparently been going on for several months.

I find this was serious misconduct. Vanair’s money was being paid at the behest of the defendant to himself with no supporting documentation. Receipts were only produced when there was a query. The source documents for the receipts eventually produced were never produced even though the plaintiff says he has them at home.

2. Unusual Payments

A total of Vt116,524 in “unusual payments” was made during 1999 to the plaintiff. There was no supporting documentation. The plaintiff accepted he had received the money but said it was properly refundable. At first he said “there was supporting documentation, medical refund, can’t remember anything else”. He then said it was for medical, fuel and other expenses. The other expenses were for things, “I had purchased for the company less than Vt5,000”. He agreed receipts or documentation was needed and conceded such support was short by Vt57,000.

I find this was serious misconduct. Even on the plaintiff’s evidence Vt57,000 had been paid to him without supporting receipts. It was unclear whether the fuel repayments were being considered twice, under this head, and head one.

3. Salary Advance

In October 1998 the plaintiff received a salary advance of Vt50,000. The defendants say there was no approval from higher authority. The plaintiff says he had oral approval from the acting general manager, Yves Chevalier. He agreed there was no written record of that approval. Yves Chevalier did not give evidence. The plaintiff agreed he did not give this explanation to the disciplinary hearing.

I find this was serious misconduct. Paragraph 4.2 of the Handbook is clear. Advances are not allowed, except in emergency, and with a request in writing. There was no evidence of an emergency. Repayment from salary is required within a month of advance. This had not occurred until January and February 1999. When asked about this by Hannah Liu, the plaintiff gave no explanation.

4. Thompson Peter’s cheque

A Vanair cheque for Vt. 58,095 was made payable to Thompson Peter. It was his holiday pay. The plaintiff cashed the cheque. He said this was normal practice, although there was no authority for it. His purpose was to send the cash to Peter by bag on a plane so Peter had cash and not a cheque. He did say Peter had not authorised this and was unaware of it.

When questioned about this by Hannah Liu, during her financial investigation, he said he thought he might have given out the cash to staff asking for advances. He couldn’t give their names as he couldn’t remember them.

Within twenty-four hours of this conversation with Liu the plaintiff paid the sum back in to Vanair and gave Liu the receipt.

The conduct of the plaintiff throughout this transaction is one of serious misconduct.

5. Cash Advance

The plaintiff agreed he had taken over Vt10,000 from the head cashier, but says it was for agents. He said the general manager had given him the authority to get advances for staff. He volunteered the fact of these drawings of cash and offered to have the total sum deducted from his pay. No record, receipts or other documentation was produced to support this.

I find this was serious misconduct. Cash was being drawn, there was no evidence to support his alleged authority, no record was kept and repayment only offered when it was clear a full financial investigation was under way.

I did not find the evidence of the plaintiff reliable. In many instances it lacked complete credibility. A picture is painted of a senior manager, in a position of trust, who must know the Handbook, consistently putting himself in possession of company money, keeping few or no records, having little or no authority and making repayment or justification in most instances only when challenged. I find the defendants were entitled to dismiss the plaintiff for serious misconduct on any one or more of these transactions without notice or payment. Vanair could not in good faith be expected to take any other course.

Before Vanair could dismiss the plaintiff he had to be given adequate opportunity to explain himself. In this regard sections 75(1) and (2) Employment Act incorporate the Handbook into this contract of employment. Section 75(1) and (2) states:-

(1) An employer may make regulations to provide for matters concerning the technical organisation of the work of the undertaking, discipline and requirements concerning hygiene and safety necessary for the proper operation of the undertaking.

(2) Any regulations mentioned in subsection (1) shall, before coming into operation, be submitted for approval by a labour officer, and, if approved by him, shall be deemed to form a part of the contract of employment of all the employees to whom they relate.

I find the plaintiff was given adequate opportunity to answer the charges against him. I find he did know of the dates and times of all hearings but chose to absent himself from the one on 13 September. I find the procedures were followed, save for one matter I shall deal with below. It is pertinent to note that apart from the fuel receipts he offered little explanation for the allegations. There was some confusion at the start of the 9^th September meeting as to what was being alleged. By the end it must have been clear what was involved. The plaintiff was notified of the meeting of 13 September and failed to attend. I do not find that Marakon Alilee’s letter of 26 August meant throughout the hearings the only issue was one of fuel receipts.

I have considered the evidence of Hanna Liu and Marakon Alilee. I accept their evidence. Alilee at times was working from recollection but through correspondence and evidence he showed Vanair were willing to and did carry out the proper procedures. I also accept the evidence of Reynold Boeson. If anything his evidence tended to assist the defendants.

Section 7 of the Handbook is entitled Code of Conduct and states “In case where the case is serious misconduct, dismissal will be applicable upon the consultation with the Disciplinary Committee and Labour officer”. Section 7. 8 states that “Discipline measure to be issued to staff must have the approval of the Labour Officer”

The defendants accept that no approach was made to the Labour Officer. The plaintiff says the Handbook, by statute, is part of the contract of employment, (section 75(1)and (2)). The defendants breached that section, therefore the termination was unlawful. [Section 53(1) was cited by the plaintiff, but this gives the option, in certain circumstances, to the employee to terminate the contract].

Vanuatu does not have legislation creating a tribunal with laws whereby a dismissal is unfair and compensation must be paid if the employer fails to show the dismissal was fair and the procedure was fair. [It must be noted that some such legislation does contain provision for declaring a dismissal fair if the conduct is serious and the breach of procedure was proportionately not great or would have made no difference].

In this case the defendants have shown serious misconduct by the plaintiff, that is breaches of the contract, entitling them to dismiss him. In dismissing him they have breached a procedural requirement. In the particular circumstances of this case I do not find that invalidates the termination and further any damages for that breach, would be derisory. This does not mean an employer can ignore disciplinary procedures if misconduct is serious. Such procedures exist for the protection of employees. However given the seriousness and persistence of the misconduct, once found, in this case there can only have been one outcome.

The plaintiff, I am satisfied, was aware of his right of appeal, he was reminded of it on 9^th September. He chose not to appeal his dismissal.

I consider the counterclaim. The defendants alleged the mistaken payment of Vt.2,177,048 to the plaintiff upon termination. The plaintiff replied the payment was made over two weeks after the decision to terminate for serious misconduct. It can’t be a mistake.

I find this payment was not a mistake. It was made in the full knowledge of the serious misconduct. I have considered whether the payment was, in some way, an acceptance by the defendant that the misconduct did not justify dismissal. I do not find that. It appears to have been an over-generous act towards an employee who could have been dismissed without any payment.

For the reasons set out above I dismiss the claim and the counterclaim.

I have heard argument concerning costs. Both claim and counterclaim have been dismissed, although the costs involved in the former are considerably greater than the latter. There was a failure by the defendants to follow the procedure, this should have been known at he outset and ‘factored in’ to the assessment, nevertheless it was a significant factor.

In my judgment costs should lie where they fall. There will be no order for costs.

Dated at Port Vila this 9^th April 2001

R.J. COVENTRY
JUDGE