Pouono v Corporation of the Presiding Bishop to the Church of Jesus Christ of Latter Day Saints [2002] WSSC 27 (25 October 2002)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN:

IDA POUONO of Pesega near

Apia in Samoa, Married Woman
Plaintiff
AND:

THE CORPORATION OF THE PRESIDING BISHOP TO THE
CHURCH OF JESUS CHRIST OF LATTER DAY SAINTS

a duly registered corporation having
Its registered office at Pesega
Defendant

Counsel: Mr RSP Toailoa for the Plaintiff
Ms K Sapolu for Defendant

Hearing: 20-23 November 2000
Decision: 25 October 2002

Submissions: Plaintiff -15 December 2000
Defendant - 20 December 2000

DECISION OF JUSTICE VAAI

Introduction:

The plaintiff, a married woman, was employed in November 1996 as a payroll clerk at the defendant’s Samoa Service Centre at Pesega. She was paid fortnightly at an annual salary of $11,939 and part of her duties include the preparation of payroll for about 400 employees. Her immediate supervisor is the Manager of Finance to whom the plaintiff and six other employees were responsible to. One of the other six is the custodian of the petty cash float. On the 10^th January 2000 the plaintiff together with the custodian of the petty cash and Ms Rhonda Ulberg were dismissed for the unauthorised used of the petty cash. They were paid fortnightly salary in lieu of notice. The plaintiff claims that her dismissal was unjustified, and without cause, unfair and wrongful.

Background:

At the time of the plaintiff’s dismissal, Aniseto was the custodian of the petty cash float. Sometimes in 1997 for a period of about 6 months the plaintiff was the custodian of the petty cash which means she is quite familiar with the purpose and procedure involving the use of the petty cash. The procedure of the defendant in relation to the petty cash is that it is used for the purchase of minor miscellaneous items. When an item is purchased using the petty cash the manager of the department or section issues a voucher which the custodian keeps upon disbursing the cash and at the completion of the purchase the receipt is given to the custodian. At the end of the day the custodian balances the cash against the vouchers and receipts, places the remaining cash and vouchers in the money box which is then locked overnight in a safe which can only be opened the following working day by two senior employees each of whom has a lock combination. One of the senior employees with the lock combination is the Finance Manager. On the 23^rd December 1999 (which was the last day of work for that year) a spot check of the petty cash was done by the Finance Manager (Filoi Neemia); and two other senior employees in the absence of the petty cash custodian. A shortage of $495 was discovered.

Prior to the December 1999 spot check a shortage of the petty cash was also discovered in October 1999 when the same petty cash custodian Aniseto was absent from work through illness and another employee was asked to manage the petty cash for that day; and in balancing the petty cash that morning a shortage of about $367.00 was discovered. When the short was put to the custodian Aniseto upon his return to work Aniseto agreed to and did make up for the shortfall in the petty cash.

When work resumed on the 10^th January 2000 the petty cash custodian Aniseto was questioned by the Finance Manager about the shortage discovered in December 1999. Two other employees namely Rhonda and Leone were also questioned. After conducting interviews with the said employees the Finance Manager met with the Manager of the Samoa Service Centre (Vaaulu) and the area specialist controller (Molisa) and it was decided that the petty cash custodian, the plaintiff and Rhonda be dismissed immediately and the three of them were paid two weeks salary in lieu of notice. On the following day the 11^th January 2000 when the plaintiff turned up for work she was told of her dismissal.

Statement of Claim:

The plaintiff’s first cause of action is that she was unfairly and wrongfully dismissed and in doing so the defendant was in breach of contract to employ the plaintiff until she retires, or resign, or made redundant or terminated for just cause. As a consequence of the breach the plaintiff seeks reinstatement and payment of full salary from the date of termination to the date of reinstatement, or alternatively, she seeks compensation for loss of earnings and other benefits totalling $236,929.46; and in addition she also claims general damages of $200,000.00 for unfair dismissal; embarrassment, frustration and distress.

For the unauthorised use of the petty cash the defendant says that the plaintiff was guilty of misconduct and her instant dismissal was therefore justified. It is contended by the defendant that the conduct of the plaintiff showed a complete disregard or a deliberate flouting of the essential conditions of the contract of service. Counsels for the plaintiff and for the defendant both agree (correctly in my view) that firstly the degree of misconduct that will justify dismissal is usually a question of fact: See Blyth Chemicals Ltd. v Bushnell (1933) 49 CLR 66; and secondly that the onus of proving that the dismissal is justified lies with the defendant.

The defendant says that on the last day of work in 1999 (December 23) there was a spot check of the cash done by Filoi Neemia (the Manager of Finance) and two other employees of the defendant and a deficit of $495.00 was discovered. Aniseto the petty cash custodian was not present and on his return to work on the 10^th January 2000 when work resumed he was told of the spot check and questioned about the missing funds by Filoi the Finance Manager. From here onwards there is a direct conflict in the evidence for the plaintiff and for the defendant. According to Filoi’s evidence the petty cash custodian (Aniseto) initially denied knowledge of the missing funds but later on upon further questioning he admitted that he was urged by the plaintiff to use the money to hire a rental car for a co-worker (Leone) who got married on the 18^th December 1999. During the course of questioning he also told Filoi that the plaintiff and a co-worker Rhonda had on several occasions used the petty cash; Rhonda had borrowed more than $200.00; the plaintiff on one occasion borrowed $40.00, and sometimes when he was out of the office he was told on his return by Rhonda and the plaintiff that they used the petty cash on instructions from Filoi. Filoi denies giving such instructions. In fact she says that she told Aniseto she should have been told when both the plaintiff and Rhonda took monies from the petty cash. As a result of what Aniseto said, Filoi then questioned Rhonda and Leone. Leone in her evidence confirmed she got married on the 18^th December 1999 and the plaintiff did arrange for a rental car for her use after her wedding. She gave the plaintiff $400.00 for 4 days rental. Aniseto confirmed that the plaintiff did ask him to arrange a rental car and the plaintiff did pay him $400.00 for the rent. Rhonda according to the testimony of Filoi admitted to taking monies from the petty cash. Rhonda denied making such admissions. She only admitted to borrowing $20.00 and she gave Aniseto US$20.00 as security. She paid the $20.00 when she changed her American cash into Talas. As a result of what Aniseto, Rhonda and Leone told Filoi that day, Filoi then met with the Samoa Service Centre Manager (Vaaulu) and the Area Specialist Controller (Molisa) and it was then decided that the plaintiff, Rhonda and Aniseto should be dismissed immediately. Vaaulu also talked to both Aniseto and Rhonda separately and each one admitted borrowing from the petty cash before the decision to terminate was made. Aniseto also told Vaaulu that the plaintiff and Rhonda did borrow from the petty cash.

On the following day the 11^th January 2000 when the plaintiff turned up for work she was informed by Filoi of her termination and the reasons for the termination. The plaintiff denied any wrong doing and demanded to see the Manager Vaaulu. She was granted audience with Vaaulu. According to Vaaulu he talked to the plaintiff for 15 to 20 minutes and during the course of the conversation the plaintiff admitted to borrowing $40.00 and $150.00 from the petty cash to buy food. And at the request of the plaintiff both Aniseto and Rhonda were brought in. Filoi also came in and Vaaulu told the plaintiff, Rhonda and Aniseto that their dismissals is confirmed and when they were given a chance to speak each one of them apologised. The plaintiff apologised for her wrong doing and asked for forgiveness.

The plaintiff, Rhonda and Aniseto all denied making any admissions to either Filoi or Vaaulu. Although Aniseto did admit to arranging a rental car for Leone at the request of the plaintiff he denied telling Filoi that missing fund was used to pay for the rental car; he denied telling Filoi or Vaaulu that both Rhonda and the plaintiff borrowed from the petty cash on several occasions. He confirmed being told by the plaintiff and Rhonda on several occasions when he was away from the office that they accessed the petty on instructions from Filoi. He denied apologising to Vaaulu. He did confirm giving the $40.00 to the plaintiff but the money was his own money and not from the petty cash. In fact he said it was the other employees including Filoi and Leone who borrowed from the petty cash.

Rhonda in evidence admitted that on the 10^th January 2000, Filoi told her that Aniseto has been questioned about the petty cash shortage and Aniseto has stated that she and the plaintiff were taking money from the petty cash. Apart from the $20.00 she borrowed on the security of her US$20.00 she denied taking monies from the petty cash on any other occasions. She also denied talking to Vaaulu that same day. She also denied making any admissions or apologising to either Vaaulu or Filoi that day or the day after.

The plaintiff says that when she came to work on the 11^th January 2000 she was told by Filoi that she and two others were dismissed for using the petty cash. She denied the allegations and demanded to see Vaaulu. She did. She denied taking any monies from the petty cash; she denied making any admissions to Vaaulu or Filoi. In respect of the $40.00, she confirmed the evidence of Aniseto that the $40.00 was from Aniseto but not from the petty cash.

It is alleged by the plaintiff that she was victimised by her supervisor Filoi after the plaintiff had complained to the Manager (Vaaulu) about Filoi amongst other things for using the petty cash. On the 13^th January 1999 Filoi wrote to the plaintiff expressing her disappointment with the plaintiff’s performance, and reminding the plaintiff about previous instructions and also warning the plaintiff that she will be terminated if she does not improve her performance. A copy of this memorandum was sent to the manager (Vaaulu) and in response the plaintiff wrote to Vaaulu complaining about Filoi. Again on the 29^th April 1999 Filoi wrote to the plaintiff giving her a final warning when the plaintiff failed to properly process the payroll resulting in an employee being paid twice. Bearing in mind that the plaintiff was employed in November 1996 and one of her duties then was the preparation of the payroll it comes as no surprise that if by April 1999 she has still not mastered the compilation of the payroll so as to avoid simple mistakes, then understandably her immediate supervisor should be annoyed and concerned. In my view the allegations of victimisation by the plaintiff against Filoi are unfounded. This view is supported by the evidence of Filoi concerning the morning of the 11^th January 2000 when the plaintiff turned up for work and the allegations of the petty cash was put to the plaintiff; Filoi said the plaintiff denied the allegations and demanded to see Vaaulu. Filoi allowed the plaintiff to see Vaaulu. Furthermore the plaintiff cannot possibly speculate that the spot check of the petty cash done on the 23^rd December 1999 was planned by Filoi to get at the plaintiff because the plaintiff was not in charge of the petty cash; and secondly because it was the last day of work common sense would dictate that the petty cash should be balanced. Filoi did not do the spot check by herself and Filoi had no idea at the time that the plaintiff and others were borrowing from the petty cash; and Filoi did not contemplate a discovery of a shortfall in the petty cash.

I now turn to consider the conflict in the evidence for the plaintiff and for defendant concerning the questioning of the plaintiff and the other two dismissed employees by Vaaulu and Filoi. Although Aniseto emphatically denied telling Filoi that the missing petty cash was used to pay for a rental vehicle for Leone I find his evidence less convincing bearing in mind the other evidence before the court. As a consequence of what Aniseto told Filoi, Leone was questioned by Filoi and Leone confirmed that the plaintiff did arrange for a rental car. There would have been no other reason for Filoi to question Leone but for the information relayed to her by Aniseto. Secondly Rhonda confirmed she was questioned the same morning by Filoi who told her that Aniseto has said that it was the plaintiff and Rhonda who took the money from the petty cash. Again in my view Rhonda was questioned as a result of the information given by Aniseto to Filoi. In fact Rhonda Leone and the plaintiff were the only persons questioned about the missing funds following the questioning of Aniseto which tends to confirm the evidence of Filoi that the plaintiff and Rhonda were the names given by Aniseto. Thirdly Aniseto in his evidence acknowledged that in his absence from work in October 1999 he was told on his return there was a deficit of about $367.00 and although he denied responsibility he did make up for the short. It is not difficult to form the view that Aniseto agreed to pay the deficit because he was responsible for it and as the custodian of the petty cash he knew of the shortfall or should have discovered it when he balanced the cash at the end of the day. The obvious conclusion is that he knew of the deficit and I have formed the view that Aniseto did tell Filoi on the morning of the 10^th January 2000 that the plaintiff and Rhonda took monies from the petty cash. I also accept that he told the Centre Manager Vaaulu the same morning that the plaintiff and Rhonda were borrowing from the petty cash.

The next issue to resolve from the conflicting evidence is whether the plaintiff did borrow or take money from the petty cash. According to the evidence Vaaulu, the plaintiff during their meeting on the morning of 11^th January 2000 originally denied using funds from the petty cash but subsequently admitted to taking $40.00 which she paid back soon after. She also admitted to taking $150.00. Both amounts were used to buy food. Rhonda and Aniseto were then brought in and Filoi also joined the meeting. Vaaulu spoke to the 3 of them and reiterated the decision made to dismiss them. The plaintiff and the others confirmed their borrowing from the petty cash and each one apologised. Aniseto according to Vaaulu’s evidence told the meeting the plaintiff borrowed from the petty cash more than once.

The plaintiff, Rhonda and Aniseto admitted meeting with Vaaulu on the 11^th January 2000 but they denied admitting taking monies from the petty cash and they denied apologising to Vaaulu. Rhonda admitted to borrowing $20.00 but she placed US$20.00 in the petty cash until she paid back the $20.00. Although the plaintiff insisted that she only borrowed $40.00 from Aniseto I have no difficulty in drawing the conclusion that if she did ask Aniseto for $40.00 she did so because Aniseto had ready access to the petty cash. Vaaulu the Centre Manager impresses the court as an honest and fair boss who was not shaken under cross-examination. I accept his evidence that the plaintiff did admit on the morning of the 11^th January 2000 to borrowing from the petty cash and she did apologise for her wrongdoing. The plaintiff on the other hand appears to be less convincing and I was less impressed with her evidence under cross-examination.

The next question to decide is whether the unauthorised borrowing of the plaintiff from the petty cash amounted to misconduct, which can justify instant dismissal. Lord Evershed MR in Laws v London Chronicle Ltd (1959) 2 All ER 285 said that a single act of disobedience or misconduct could justify dismissal only if it is of a nature, which goes to show that the employee is repudiating the contract of service or one of its essential conditions.

And in Blyth Chemical Ltd. v Bushell (supra) it was held that misconduct which will justify instant dismissal is conduct incompatible with the fulfilment of an employee’s duty or involves an opposition or conflict between his interest and his duty to his employer or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between the employer and the employee. The conduct itself must involve the incompatibility conflict or impediment or be destructive of confidence.

Evidence adduced by the plaintiff described somewhat disparagingly the conduct of the Finance Manager and other staff members of the defendant as if it is a normal practice within the Service Centre to borrow from the petty cash. Other allegations aimed at the Finance Manager by the plaintiff but unrelated to the circumstances involving the dismissal of the plaintiff need not be considered as they do not have any bearing and therefore do not influence my findings of the relevant facts concerning the issues involved under determination. Suffice to say however that bearing in mind that employees of the defendant engaged in the defendant’s service centre are closely scrutinised as to their character before being hired so that they are supposedly of impeccable quality, I find the character of the Finance Manager upon her own admission to fraudulent and dishonest dealings to be contradictory to the expected norm and code of conduct of those employed by the defendant in its service centre. It must however be made quite clear that the fraudulent and the dishonesty conceded to are not work related and although it may have some bearing on her credibility as a witness it has no relevance on the issues of this case.

I do not accept allegations by the plaintiff that a number of the staff members of the defendant were borrowing from the petty cash. I accept that the plaintiff did borrow more than once without any authority from the petty cash and I accept that the unauthorised borrowing amounted to misconduct, which justified the defendant to dismiss the plaintiff instantly. From my findings on the facts I reach the conclusion that for the unauthorised borrowing from the petty cash the plaintiff did disregard an essential condition of the contract of employment and the breach is of such a serious nature that the defendant as the employer was justified in dismissing the plaintiff instantly.

The Labour Employment Act

Section 21 of the Act states:

1) A contract of service for a specific work or for a specific period of time shall, unless otherwise terminated in accordance with the provisions of this Part, terminate when the work specified in such contract is completed or the period of time for which such contract was made has expired, as the case may be.

2) A contract of service for an unspecified period of time shall be a continuous contract until terminated by either party in accordance with the provisions of this Part.

3) Either party to a contract of service may at any time give the other party notice of his intention to terminate such contract.

4) The length of such notice shall be the same for both employer and worker and shall be determined by any provision in that behalf in the contract or in the absence of such provision shall be equal to the length of the wage period fixed pursuant to this Act.

Section 40 says:

Nothing in this Act shall operate to prevent any employer or worker from enforcing their respective civil rights and remedies for any breach or non-performance of a contract of service by way of civil proceedings.

It is submitted by the plaintiff that because of section 40 the defendant cannot pursuant to section 21(3) terminate the contract by giving notice of intention to terminate. The defendant therefore in the absence of any just cause is obliged to employ the plaintiff until she retires, or until redundancy or until she resigns. Reliance is placed by the plaintiff in the decision of Ryan CJ in Motoi (Silivia) and Vaomua (Tutonu) v Western Samoa National Provident Fund (1980-1993) WSLR 333 at page 335 last paragraph:

"The common law of course never stands still. In my view this is a classic case where the court should look at the equity of the situation. There are no binding decisions on this court, which would prevent it from taking the course, which I propose to take. It seems to me that in this day and age employees should have the rights which are set out in legislations in most other jurisdictions and which are (not) excluded by section 40, to security of tenure without being subjected to dismissal for dubious or inconsequential reasons."

In my view Ryan CJ found that there was breach of contract by the employer (a statutory corporation) and the employees were unfairly dismissed or were dismissed for very dubious reasons. The decision is not to be read as authority for the proposition enhanced by the plaintiff that section 40 of the Labour and Employment Act deprives all employers of any right in any contract of service to give the employee notice of intention to terminate the contract. In fact in Lui Lauano v Yazaki Eds Samoa Ltd unreported decision of Wilson J 9/8/2000 it was held following Brandt v Nixdorf Computer Ltd (1991) 3 NZLR 750 that an employer is entitled to terminate without any cause or grounds and without disclosing any reasons provided that the termination is on reasonable notice. And what is reasonable notice depends upon the facts of each case. It is not possible and is not the law that any particular period will constitute reasonable notice for a particular category of employment or employee, whether by way of his status, title or otherwise. Section 40 preserves the common law rights of both the employer and employee to sue for breach of contract.

In my view therefore the argument by the plaintiff that the defendant is obliged to employ her until her redundancy, resignation or retirement is without merit and is accordingly rejected.

Dismissal Procedurally Unfair and Breaches the Rules of Natural Justice

It is alleged by the plaintiff in paragraphs 4 and 5 of the statement of claim:

4. That the manner of the plaintiff’s dismissal was abrupt and did not give her an opportunity to be heard and thereby violating the rules of natural justice.

5. That the defendant’s failure to take due account of the factual circumstances of the allegations against the plaintiff and its failure to give proper reconsideration to the plaintiff’s position resulted in a breach by the defendant of its implied duty to act fairly against the plaintiff.

Particulars

The explanation by Aniseto Auapaau who was in charge of the petty cash that the $40 he had lent to the plaintiff (which was promptly repaid by the plaintiff the next day) was his own money and not money from the defendant’s petty cash.

As his first ground of attack counsel for the plaintiff argues that the defendant did not comply with its own procedures when it terminated the services of the plaintiff. The procedures he says as brought out in the evidence of Vaaulu the Manager of the defendant’s Service Centre are:

a) If there is a serious allegation then the employee could be terminated on the spot.

b) That the allegation against the plaintiff was considered a serious allegation.

c) That an investigation should be carried first which necessitates talking to employee to be terminated.

Counsel further says that Vaaulu conceded under cross-examination that the plaintiff’s termination was not in accordance with the above procedures. In my view although Vaaulu did say that sometimes he requires approval of the area Manager in Australia he insisted that he did terminate the plaintiff and the other two employees without overseas approval because misuse of funds was a very serious matter, which required immediate action. An investigation was also done before the decision to terminate was made although he conceded that the plaintiff was not questioned during the inquiry. In any event the Area Manager and another officer of the defendant from Sydney Australia travelled to Samoa to investigate and they did confirm the decision to terminate the employment of the plaintiff.

As a second ground of attack counsel argues that the defendant violated the rules of natural justice and failed to act fairly in the circumstances. Counsel relied solely on the text by Hughes, Roth and Anderson titled Labour Law 2^nd Edition and the authorities cited therein. In particular counsel cites the decision of the NZ Arbitration Court in NZ Food Processing Union v Uniliver NZ Ltd [1990]; 1 NZJLR 35 at 45-46 which sets out the minimum requirements the employer must comply with namely:

I) Notice to the worker of the specific allegation of misconduct to which the worker must answer and of the likely consequences if the allegation is established.

II)An opportunity, which must be real as opposed to a nominal one, for the worker to attempt to refute the allegation or to explain or mitigate his or her conduct.

III) An unbiased consideration of the workers explanation in the sense that consideration must be free from predetermination and uninfluenced by irrelevant considerations.

Since the termination of the plaintiff was not in accordance with the requirements for procedural fairness and the rules of natural justice, counsel therefore argues that the dismissal was unlawful and not justified.

Logically the first point to consider is whether the New Zealand authority relied on by counsel has any bearing or relevance in our jurisdiction. In the first place we do not have any comparable legislation to the New Zealand Industrial Relations Act 1973 which established a system of law designed to settle industrial disputes within its own jurisdiction. Counsel however relies on the dicta of Ryan CJ in Motoi (Silivia) and Vaomnua (Tutonu) v Western Samoa National Provident Fund supra at page 335:

"It seems to me that in this day and age employees should have the rights which are set out in legislation in most other jurisdictions and which are not excluded by Section 40 to security of tenure without being subjected to dismissal for dubious or inconsequential reasons."

The functions of the court need not be emphasised; legislation policies are dictated to and governed substantially by the state of the economy so that it would in my view not only be dangerous but also contrary to established principles for this court to be guided by the underlying principles of the legislations of the more economically developed nations like NZ. In fact it is recognised by Hughes, Roth and Anderson that the desirability of procedural fairness is by no means a universally accepted proposition. Sections 21 and 40 of our Labour and Employment Act do not deprive the employer of his common law power to dismiss the employee instantly for misconduct. This is clearly a case where the defendant as employer was acting under purely common law powers to dismiss. The defendant is not required to comply with the rules of natural justice. And in any event the plaintiff is not asking the court to review the decision of the defendant to terminate her employment.

Defamation as a cause of Action

Subsequent to her dismissal the plaintiff requested from the defendant a letter of reference resulting in the following letter typewritten by the Finance Manager on her computer.

"14 March 2000

To Whom It May Concern,

Dear Sir/Madam,

This is to certify that Mrs Ida Pouono was employed by the Samoa Service Centre – LDS Office Pesega for more than two years. She was employed as a Payroll Clerk in the Finance Department. She was terminated from our office due to mishandling of funds. She is an unreliable employee. I do not wish to recommend her to any employer.

If you need more information please do not hesitate to contact our office.

Yours faithfully,

Filoi Neemia

FINANCE AND RECORDS MANAGER"

The letter was placed in an envelope and given to the plaintiff who was waiting outside the office of the Finance Manager. Upon reading the contents of the letter the plaintiff walked into the office of the Centre Manager (Vaaulu) and gave the letter to Vaaulu who read it, crumpled it up, threw it into the rubbish bin and typed another reference for the plaintiff. The letter complained of was therefore only seen by Vaaulu because the plaintiff showed it to Vaaulu; so that it was not the author of the letter who published the letter but the plaintiff herself caused the publication of the letter to Vaaulu.

In any event Vaaulu did not agree with the contents of the letter resulting in a replacement letter by him. A copy of this letter complained of was subsequently given by the author Filoi to Vaaulu who faxed it to the Solicitor for the defendant after these proceedings were commenced by the plaintiff, so that the second publication as alleged by the plaintiff was necessitated by the course of action taken by the plaintiff and if it amounts to publication it was for the sole purpose of these present proceedings. For my part I find that the plaintiff failed to prove that the defendant caused publication of the letter and the claim must therefore fail.

Judgment is accordingly given for the defendant. Plaintiff is ordered to pay costs of $1,500.00 to the defendant.

JUSTICE VAAI