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Vagi v National Capital District Commission [2002] PNGLR 44 (23 August 2002)

NATIONAL COURT OF JUSTICE

LEGU VAGI

v

NATIONAL CAPITAL DISTRICT COMMISSION

Waigani: Kandakasi j
20 June; 23 August 2002

Master and servant – Contract of employment – Termination of written contract of employment – Effect of – Grounds for termination - Alleged misappropriation and mismanagement – Contract of employment provides for instant dismissal for cause – Termination for cause.

Facts

The plaintiff was employed under a contract of employment as city manager of the defendant. He was initially suspended with pay and eventually charged for mismanagement and misappropriation of the defendant's funds where under his tenure as city manager, and directly owing to his lack of supervision and prudent management, the defendant was in debt of K1.6 million and running an overdraft of K20 million; he simultaneously allowed K2.5 million to be issued to contractors and a further K1.7 million worth of cheques were raised but withheld.

Held

1. At common law, an employer is entitled to terminate an employee with or without reason. However, where the ground for dismissal affects the reputation of the employee concerned, he must be given the opportunity to be heard and defend himself before he is terminated. This principle applies in our country in nearly all public sector employment and to private sector only by virtue of agreement of the parties to a contract of employment: Jimmy Malai v Papua New Guinea Teachers Association [1992] PNGLR 568.

2. It is settled law that if an employee is terminated not in accordance with the agreement of the parties, that amounts to wrongful termination. It is not unusual for parties to execute a contract that gives the employer a right to fire or terminate without prior notice for cause and for termination on notice or pay in lieu of notice for any reason. An employer would be in breach of a contract of employment having such a provision, if he terminates without notice and or payment in lieu of notice for reasons other than the prescribed good cause. In other words, there would be no breach of contract, if the employer terminates the employee for a prescribed cause, without prior notice or payment in lieu of notice but in all other cases there must be notice or pay in lieu of notice. The usual remedy for unlawful dismissal is damages. The measure of damages is usually the period of notice, unless the contract otherwise provides. The Supreme Court judgments in Nazel Wally Zanepa v Ellison Kaivovo & Ors (29/11/99) SC623 and Ereman Ragi & The POSF Board v Maingu (29/06/94) SC 459 confirm this position.

3. In this case, the defendant was entitled to terminate the plaintiff's contract of employment because he was in breach of various provisions of his contract which amongst other things, required of him as Chief Executive Officer not to authorize or commit the defendant to expenditure without first checking the availability of funds or obtaining approval to an amount of over expenditure. This was a serious breach of his contract which warranted termination.

Papua New Guinea cases cited

Curtain Bros (QLD) Pty Ltd v The State [1993] PNGLR 285.

Ereman Ragi & The POSF Board v Maingu (1994) unreported SC459.

Jimmy Malai v Papua New Guinea Teachers Association [1992] PNGLR 568.

Leo Nuia v The State (2000) unreported N1986.

Nazel Wally Zanepa v Ellison Kaivovo & Ors (1999) unreported SC623.

Peter Aigilo v Sir Mekere Morauta & Ors [2001] PNGLR 668.

Rooney v Forest Industries Council of PNG [1990] PNGLR 407.

Steamships Trading Co. Ltd v Joel & Ors [1991] PNGLR 133.

Other cases cited

Bank of Australia v Palmer [1897] UKLawRpAC 44; [1897] AC 540 at 545.

O'Connor v Hume [1954] 1 WLR 824.

Reliance Marine Insurance v Duder [1912] UKLawRpKQB 90; [1913] 1 KB 265.

Tsang Chuen v Li Po Kwai [1932] UKPC 50; [1932] AC 715.

Counsel

A Tupou, for the plaintiff.
J A Jnr, for the defendant.

23 August 2002

Kandakasi J. This is a claim by Mr. Legu Vagi (Mr.Vagi) for damages allegedly for wrongful termination of his contract of employment (the contract) with the National Capital District Commission (NCDC) on the 11 December 1998. Prior to that he was suspended with pay from the 3 June to 12 December 1998, which Mr. Vagi says was outside and therefore in breach of his contract with the NCDC. On the other hand, the NCDC says it lawfully terminated the contract for misappropriation and mismanagement. This it submits was a termination for cause within the meaning of clause 8 of the contract.

Issues for Determination

The main issue for determination therefore is this - did the NCDC terminate Mr. Vagi's contract in accordance with the terms of the contract? A subsidiary issue to that is whether the suspension prior to termination amounted to a breach of the contract and if so what is the legal effect on the contract? A further issue for consideration is, if the termination is found to be unlawful what are Mr. Vagi's damages, if any?

Evidence

The relevant evidence is in affidavit form for both parties together with some oral evidence from Mr. Vagi under cross-examination. The affidavits for Mr. Vagi are from himself sworn respectively twice on 20 February 2002 and one on the 18 June 2002. The NCDC's affidavits are from Mr. Bernard Kipit sworn respectively on the 11 February and 14 July 2000. These affidavits were also admitted into evidence without any objection from Mr. Vagi.

Facts

The facts from these evidence are straight forward and I find the relevant facts to be this. Mr. Vagi was employed as its chief executive officer by the NCDC under the title "City Manager" under a written contract. The contract commenced on 23 December 1997 and was to expire on 23 December 2000. He took up his office on 23 December 1997. By letter dated 2 June 1998, Mr. Vagi was suspended allegedly for mismanagement and misappropriation of public funds resulting in the NCDC's main operation account with the then Papua New Guinea Banking Corporation (PNGBC) running into a debt of K1.6 million in overdrafts. He was on full pay except for his motor vehicle and such other allowances that were rendered unnecessary by reason of the suspension from official duties.

On 12 June 1998, Mr. Vagi was served with a further suspension notice extending the period of suspension to 12 September 1998. That notice also contained formal disciplinary charges laid against him. Mr. Vagi says he responded to the charges under cover of a letter dated 12 June 1998. He does not say how or to whom his responses were delivered. The NCDC says no responses were received from Mr. Vagi. Mr. Vagi was cross-examined but not on this aspect. The evidence for the NCDC is from Mr. Kipit in his affidavit of 14 July 2000. He was not cross-examined in any respect. That means his evidence stands admitted or accepted by Mr. Vagi. What the NCDC says is consistent with the minutes of its Board that eventually met and resolved to terminate Mr. Vagi, on 11 December 1998. Those minutes note that Mr. Vagi had not responded to the Governor's letters.

In his responses Mr. Vagi took issue on the validity of the suspension and the laying of the charges against him. At the same time he blamed the officers below him for providing inaccurate information, if the NCDC found his advice to its Board was misleading. A clearer statement of that is in paragraph 7.10, 8.13 and 8.14 of his response, which reads:

"For your information which can be confirmed by the Director, Finance and Administration and the Financial Controller that any payment over K10,000.00 that came across to me for my signature I would always asked (sic) them if there were sufficient funds for such payment. Only and repeat only when these two gentlemen gave me the assurance that there was (sic) sufficient funds in the bank – then I would sign these cheques. Otherwise, without their advice I never signed the cheques until there was funds available in the banks."

In relation to the main allegation of mismanagement and misappropriation of public funds, Mr. Vagi made reference to an earlier advice to the NCDC Board and Finance and Administration Committee and admitted to the establishment of a K2.0 million-overdraft facility with the PNGBC. Of that, K1.6 million was used up. He also spoke of K2.5 million in cheques being raised and issued to various contractors while a further K1.7 million in cheques were raised but not yet issued. He anticipated an amount of K600,000.00 being paid into the account within a day or so and further receipts income from various sources into that account between 27 April and 19 June 1998 totaling over K10.6 million by the 19 June 1998.

Mr. Vagi does not say in his evidence nor in his reply to the NCDC Board or its Finance and Administration Committee, what steps he took to have a personal appreciation of the NCDC's financial position. There is also no evidence of what steps he took to address the issue, particularly in terms of controlling expenditure. For example, he does not speak of what steps he took to establish or strengthen any existing and properly and strictly functioning mechanisms in place to allow only true, correct and proper payments to be made. I asked Mr. Vagi in Court, when did the overdraft facility come into existence and who was responsible for it. His answer was that the previous administration created it but was not able to say when that was done. This to my mind clearly shows that Mr. Vagi did not personally have an appreciation of the relevant details of the overdraft facility, how it came into being, and what should be done to discharge it and avoid ever getting into it. He was instead prepared to expressly blame his subordinates for not providing the relevant information.

On 26 August 1998, Mr. Vagi issued these proceedings claiming damages for breach of contract. He treated his suspension as termination. After filing and serving its defence, the Board of the NCDC met on 19 December 1998 and resolved to terminate Mr. Vagi as of 17 July 1998. He was formally informed of the Board's decision by letter dated 17th March 1999. Dirua Lawyers were then engaged by Mr. Vagi to pursue a claim for full pay out of the balance of his contract. A claim totaling K185,957.32 was initially made. This has been recently changed to K362,961.09 per Mr. Vagi's affidavit of 20 June 2002.

I now proceed to deal with the issues raised. As noted earlier, the plaintiff is arguing that the termination of his contract was unlawful because he was not terminated in accordance with the provisions of the contract, in particular clause 8. He points to his suspension prior to his termination as evidence of the NCDC taking steps outside the contract, culminating in his termination. I consider it appropriate that I should deal with this part of Mr. Vagi's argument first and I do so.

Validity of Suspension

There is no dispute that the contract does not have any provision concerning suspension. It is however, a procedure that is available in the public service and most public authorities. It is a necessary procedure that is available in my view for the benefit of employees more than employers. The procedure obliges employers to follow this procedure to establish a case against an employee before taking the ultimate big step of dismissing an employee. This is the process that allows the principles of natural justice to have a part in the master and servant relationship, which is not normally available in other employment settings. At common law, employers are at almost total freedom to hire and fire at will. Therefore the suspension procedure is an exception to the general position at common law. Our Employment Act 1978, merely adopts the position at common law, by not making it necessary for an employer to give an opportunity to an employee to be heard or suspended before termination.

In this case, the employer was a public authority, a form of government. It entered into a written contract with Mr. Vagi. The normal disciplinary procedure that applies to the public sector employment setting has not been expressly incorporated into the contract under consideration. In Leo Nuia v The State (unreported judgement delivered on 29/08/00) N1986, and many others, the Courts have held that a failure to follow the normal disciplinary procedure in a public sector employment setting amounts to unlawful termination. I followed this line of authorities and arrived at a similar find in Peter Aigilo v Sir Mekere Morauta & Ors (unreported judgement delivered 09/08/01) N2103.

Despite the lack of any express inclusion of the disciplinary procedures in the contract between the NCDC and Mr. Vagi, in this case, the NCDC took it upon itself to follow that procedure. In my view, there was nothing preventing or prohibiting, the NCDC from taking such a step. As a public institution it was duty bound in my view to take the steps it took. I therefore fail to see what disadvantage or damage this process imposed upon Mr. Vagi. Instead, I find that the suspension meant that Mr. Vagi was given the opportunity to be heard before being terminated. He received his full pay and other entitlements except for a few of his entitlements under the contract rendered unnecessary by virtue of being suspended from official duties during the period of his suspension, which was about six months. At the same time, the NCDC allowed itself to be first satisfied through appropriate investigations that there was a case for a dismissal of its then chief executive. Taking that step in fact enabled Mr. Vagi to put his defence to the allegations against him to the NCDC before termination and delay his actual termination.

I find that, if the NCDC did not suspend Mr. Vagi he would not have been given the opportunity to be heard. Also he would not have received his full pay under the contract during the period he was under suspension, as he would have been terminated much earlier than later. In these circumstances, I fail to see what the NCDC did was in breach of the contract. Instead, I find that the NCDC took upon itself an obligation, although not provided for in the contract to uphold the principles of natural justice to make known allegations against Mr. Vagi and give him the opportunity to be heard. In the meantime he was receiving his full pay. Ultimately, therefore, the suspension process was a benefit to Mr. Vagi when contrasted with an immediate or termination upon payment in lieu of notice. For these reasons I dismiss, Mr. Vagi's argument that his suspension was a breach of his contract.

Whether the termination was lawful?

The decision to terminate Mr. Vagi was taken by the Board of the NCDC by a full Board resolution on 11 December 1998. The relevant part of the resolution reads inter alia:

"Governor in his briefing with the Commissioner, advised that Mr. Legu Vagi has not responded to the Governor's letters. Mr. Vagi verbally wanted to resign – not terminated. Governor on 17 April 1998 served a termination letter to Mr. Legu Vagi – still there was no response. Commission now confirms that his services be terminated as of 17 July 1998.

...

... That the assembly resolved and accept the following.

1. That Mr. Legu Vagi be terminated effective as of July 1998."

That decision to terminate Mr. Vagi was communicated to him by his successor, Brigadier General, Robert M. Dademo CBE by letter dated 17th March 1999.

I find all of these was academic as Mr. Vagi in his statement of claim endorsed to his Writ of Summons in this case, filed on the 26th August 1998, treated his contract as terminated and sued for damages for unlawful termination. So as far as Mr. Vagi was concerned he was terminated on the 17th July 1998.

This now leads us to the main issue of whether Mr. Vagi's termination was lawful. This issue can be resolved by reference to the relevant part of the contract. For the law is that where there is a written contract, it should be allowed to speak for itself to the exclusion of any extrinsic evidence: See Bank of Australia v Palmer [1897] UKLawRpAC 44; [1897] AC 540 at 545; Reliance Marine Insurance v Duder [1912] UKLawRpKQB 90; [1913] 1 KB 265 at 273; Tsang Chuen v Li Po Kwai [1932] UKPC 50; [1932] AC 715 at 727; O'Connor v Hume [1954] 1 WLR 824 at 830 all cited in the Supreme Court judgement in Curtain Bros (QLD) Pty Ltd v The State [1993] PNGLR 285 at 293. This means the terms of the contract must be allowed to speak on any point in issue between the parties. That brings into play a need to construct the terms of the contract.

A classical statement on the construction of the terms of a contract is in Chitty on Contracts, 24th edition at pages 700-701, in the following terms:

"The object of all construction of the terms of a written agreement is to discover there from the intention of the parties to the agreement...The cardinal presumption is that the parties have intended what they have in fact said, so that their words must be construed as they stand. That is to say, the meaning of the document or of a particular part of it is to be sought in the document itself: 'One must consider the meaning of the words used, not what one may guess to be the intention of the parties."

So what does the contract in the present case say about termination. The relevant part of the contract dealing with termination is clauses s 8 and 2.3. Out of these provisions, clause 8.2 needs to be first considered as it prescribes the way and manner in which the contract may be terminated. That provision reads:

"8.2: The employee shall be given three (3) months notice in writing of termination to be made pursuant to this Clause or payment in lieu of such notice, or part thereof together with a redundancy separation payment for the unexpired term of employment up to a maximum of three (3) months in addition to three (3) months payment of base salary in lieu of notice and accrued gratuity. In the event of termination pursuant to Section 8.1.2; 8.1.3; 8.1.4; 8.1.5, 8.1.6; 8.1.7, and 8.1.8 inclusive no notice shall be necessary.

Notwithstanding the application of termination provisions as set out above, the Chairman of the Commission of NCDC may under circumstances of termination other than by breach of the Contract, make an Ex-Gratia Termination Benefit of up to six months Base Salary and Contract Allowance in lieu of notice."

It is apparent from this provision that the parties intended that Mr. Vagi's employment with the NCDC under the contract could be terminated prior to the agreed date of expiry. They also agreed that any such termination must be on three months notice or pay in lieu of notice. A redundancy separation payment for the unexpired term of the contract up to a maximum of three months, in addition to three months payment of base salary in lieu of notice, and any accrued gratuity may be included. These additional payments were agreed to be within the discretion of the chairman of the NCDC. At the same time, the parties agreed that, if such a termination is for any of the reasons or causes set out in clause 8.1.2 to 8.1.8, then, the requirements for notice do not apply. In other words, the parties by deliberate written agreement agreed that the NCDC could terminate the contract prematurely, if Mr. Vagi was guilty of any of the causes or reasons set out in clause 8.1.2 to 8.1.8, without any prior notice and without payment in lieu of notice.

Of the list of reasons or causes that could give rise to a case for instant dismissal without prior notice or warning and without any payment in lieu of notice, clauses 8.1, 8.1.2 and 8.1.4 as well as clause 2.3 appear to be relevant. This is so by reference to what the NCDC says is the basis for its decision to terminate Mr. Vagi's employment. These provisions in relevant parts read:

"8.1: The employment hereunder may be terminated by the Employer if the Employer decides that:

8.1.2: The Employee has committed a serious breach of this contract or breach of the Rules for good conduct as set out in Clause 2.3 of this Contract."

"8.1.4: The employee misconduct himself by an act of commission or omission that is inconsistent with the due and faithful discharge of his duties."

"2.3. Set out below the Rules for Good Conduct that the Commission will expect the Employee to observe as an employee of NCDC. The employee shall:

...

b) Carry out work in a conscientious and timely manner at the standard of quality required by NCDC, as set out in the Position Description and the Business Performance Plan incorporated into this Contract, and all current financial and administration procedures.

...

f) Punctually and willingly obey any lawful and proper instruction given by Governor.

...

l) Not at any time authorise or commit NCDC to expenditure without first checking the availability of funds or getting approval to an amount of over-expenditure.

If the Employee acts in breach of any of the above, the management of NCDC will take disciplinary action, including possible termination."

Clause 8.1.2 makes the provisions of clause 2.3 part of clause 8. It appears clear to me that the NCDC and Mr. Vagi agreed that if Mr. Vagi breaches any of the provisions under clause 2.3, he could be disciplined. That would include a possible termination or dismissal.

The combined effect or meaning in my view of these provisions is simply this. Mr. Vagi is obligated under the contract amongst others to perform to the expectations of the NCDC. This includes a faithful discharge of his duties to the NCDC and must not engage in conduct or omission that would be contrary to that. Of particular and or specific mention is the obligation not to authorise or commit NCDC to expenditure at any one time without first ensuring that there are sufficient funds to meet the expenditures. Implicit in this is the duty not to run the NCDC into a debt position.

Another specific duty imposed on Mr. Vagi, is the duty to comply with the lawful directions of the NCDC's political head, the governor. They agreed that he should do so punctually and willingly.

The reason for Mr. Vagi's termination was mismanagement and misappropriation of the NCDC's funds, resulting in an overdraft of K1.6 million in the NCDC's main operating account as at the time of his suspension. Mr. Vagi admitted to there being such a situation. He added that initially an overdraft facility of K2.0 million was established. He was not able to say who opened the account, when was it opened and why. In answer to the Court's question on that, he said, the previous management created that, again without specifying when that was done and why. This meant and I so find that Mr. Vagi had no personal knowledge and control of the account in his capacity as the chief executive and therefore chief accounting officer. It is normal in most employment settings for full briefings of new and or incoming employees. In the absence of any evidence to the contrary, I assume that such a briefing did take place when Mr. Vagi first took up his office. I therefore find that he had no reason to know of the details of the overdraft account, if it was not created by him or during his time in office.

Further, Mr. Vagi admits to having allowed K2.5 million in cheques to be written out and issued to various subcontractors and a further K1.7 million in cheques were raised but were yet to be released. This obviously, was still going to place the account in the red. Yet he allowed cheques to be written out when there were no funds available to meet them. His solution, if it could be viewed that way, was to count on payments due and owing to the NCDC being received on time between the period 27 April to end of June 1998. Such expected payments or income to the NCDC was estimated to add to K10.6 million. He also stated in clear terms that he relied on his relevant subordinates to provide him with correct and appropriate advice. He says only when these officers said there were funds he signed cheques, especially for cheques over K10,000.00. This again confirms my view and hence finding that, Mr. Vagi had no personal control or idea about the status of the main operating account. Instead he allowed himself to be guided only by what his subordinates told him. He says nothing and I assume he had no idea of how many cheques for amounts below K10,000.00 were being drawn and what was the total of all that.

I also find that because he had no personal knowledge and idea about the status of the NCDC's accounts, he took no corrective measures to arrest the situation. For example, he could have put a hold on any payments out of the account until he had a full and a better understanding of the serious financial position of the NCDC. He could have also, instituted and directed all relevant investigation and paying officers to properly investigate, verify and go to him for clearance or authority to make payments. There is no evidence of Mr. Vagi taking such steps. He was only counting on expected payments coming in and improving the serious financial position. In the meantime, interests were inevitably going to accumulate on the overdraft facility. There is no mention of that and how Mr. Vagi was addressing that issue. All prudent managers and or heads of institutions or companies invariably take strict controls on their spending when there is a tight financial situation. Mr. Vagi fails to state what steps, if any, he took toward improving the NCDC's poor financial position apart from merely waiting for funds to be received.

If however, Mr. Vagi did have a personal knowledge and appreciated the serious financial situation facing the NCDC, he appears to have allowed cheques to be issued notwithstanding the fact that there were no funds to meet them. He also appears to have permitted payments to be made without first being satisfied that the payments were for expenditure correctly incurred and at the time of payment they were in fact due for payment. This is clear when one considers the fact that on an unknown date (which Mr. Vagi had reason to know) an overdraft of K2.0 million was established with the PNGBC. That meant that the NCDC could issue cheques up to that amount only. Yet Mr. Vagi allowed a total of K2.5 million to be issued to various contractors and a further K1.7 drawn but not yet issued. The total of all these added to K4.2 million, which was K2.2 million in excess.

There is no direct evidence but I assume that obviously, the NCDC was concerned with the status of its finances. It therefore, appears to have asked Mr. Vagi to explain, through the Governor and its Finance and Administration Committee. This is apparent in Mr. Vagi's response annexed to his affidavit of 20 February 2002. The NCDC says however, per its resolution of the 11 December 1998 that, Mr. Vagi did not respond to the Governor's letters. Mr. Vagi appears to suggest in his purported response to the charges against him, that he did not receive these letters and or had lost them. Irrespective of what was the reason, there is no doubt that Mr. Vagi failed to respond promptly to the Governor's letters. This was contrary to what he agreed to in paragraph 2.3 (f) of the contract.

At common law an employer is entitled to terminate an employee with or without reason: see Steamships Trading Co. Ltd v Joel & Ors [1991] PNGLR 133 at 141. However, it has been held in cases where the ground for dismissal affects the reputation of the employee concerned, he must be given the opportunity to be heard and defend himself before being terminated. This principle applies in our country in nearly all public sector employment and to the private sector only by virtue of agreement of the parties to a contract of employment. This is the effect of a number of authorities in our country such as the Supreme Court judgement in Jimmy Malai v Papua New Guinea Teachers Association [1992] PNGLR 568.

In this case, I find on the facts as outlined above that, the NCDC had basis to terminate Mr. Vagi under clause 8.1.2, 8.1.4 and 2.3 of the contract. When that was the case his termination came under the last sentence in clause 8.2 first paragraph. Mr. Vagi was therefore not entitle to any notice or payment in lieu of notice. Even if he was entitled to notice, that could have meant only three months prior notice or payment in lieu of notice. He was still receiving his full pay until 16 December 1998, which he admits to at paragraph 3 of his affidavit of 18 June 2002. Since his termination was effective from 17 July 1998, he received in effect about 5 months pay. That was over and above what he was entitled to if he was terminated for cause other than those listed under clause 8.1 to 8.1.10.

Mr. Vagi's claim, however, is that his termination was not in accordance with clause 8 of the contract. He argues that his termination was brought about outside the provisions of the contract. In so arguing he points to his suspension by the NCDC through the governor as an act outside and in breach of the contract. He also refers to and relies upon the judgments in the Nuia v The State (supra) and Aigilo v The State (supra) as well as Rooney v Forest Industries Counsel of PNG [1990] PNGLR 407.

There is no contest that the contract could validly be terminated in accordance with the provisions of clause 8. The procedure prescribed under that clause is that Mr. Vagi can be terminated on three month notice or pay in lieu of notice if the reason for termination is not for cause. If it is for cause, no notice or payment in lieu of notice is required.

It is settled law that if an employee is terminated not in accordance with the agreement of the parties, that amounts to wrongful termination. It is not unusual for parties to execute a contract that gives the employer a right to fire or terminate without prior notice for cause and for termination on notice or pay in lieu of notice for any reason. An employer would be in breach of a contract of employment having such a provision, if he terminates without notice and or payment in lieu of notice for reasons other than the prescribed good cause. In other words, there would be no breach of contract, if the employer terminates the employee for a prescribed cause, without prior notice or payment in lieu of notice but in all other cases there must be notice or pay in lieu of notice. The usual remedy for unlawful dismissal is damages. The measure of damages is usually the period of notice, unless the contract otherwise provides. The Supreme Court judgements in Nazel Wally Zanepa v Ellison Kaivovo & Ors (29/11/99) SC623 and Ereman Ragi & The POSF Board v Maingu (29/06/94) SC 459 confirm this position.

The case of Nuia v The State (supra) as well and Aigilio v Sir Mekere & Ors (supra) are distinguishable. Both of these cases involved two very important Constitutional offices. These were the offices of the Commander of the Defence Force and Police Commissioner respectively. In both cases, the disciplinary process in the public service applied. If a case was established for termination, after going through that process that a certain prescribed procedure all the way up to the National Executive Council endorsement had to be followed to bring about their terminations, but in both cases that was not followed. No case was made out for their dismissal for cause. It was found in both cases that, the defendants in those cases totally ignored the terms of the contract to bring about their termination. The Court in both cases therefore held in equity and in fairness, that the defendants should not be allowed to benefit from the terms of the contract they chose to ignore to assess the plaintiff's damages.

Similarly, the Rooney case is also distinguishable. There was no procedure governing termination. So the Court took the measure of her damages as the period she could have remained employed until lawfully terminated.

In the present case, as noted, there was no obligation on the part of the NCDC to follow the public service disciplinary procedure. Yet it chose to follow it and it suspended Mr. Vagi. That gave an opportunity to Mr. Vagi to know of what was alleged against him and an opportunity to be heard in his defence. Using that opportunity, he admitted to conducting in a manner that was contrary to his contractual duties. That was in the most important area of proper controls of the NCDC's finance as its chief executive officer. That gave rise to a good cause for instant dismissal without notice or pay in lieu of notice. Yet he was paid about 5 months pay, which was two months over and above what he was entitled to under the contract if he was unlawfully terminated.

Nothing was said or done in relation to the NCDC's offer to settle Mr. Vagi's claim by offering to pay him three months pay equivalent. I therefore consider it inappropriate for me to say anything about it, save only to say, it was more generous on the part of the NCDC in the light of the above findings.

For these reasons, I find that Mr. Vagi has failed to make out a case against the NCDC. I therefore order a dismissal of the claim against the NCDC with costs against Mr. Vagi. The costs shall be agreed within 7 days from today. If the parties are not able to agree on the costs within that period, they shall return to me ready with submissions as to the appropriate amount of costs.

Lawyers for the plaintiff: Henaos Lawyers.
Lawyers for the defendant: Dixon David Kombagle.