IN THE APPEAL COURT OF
THE REPUBLIC OF VANUATU
HELD AT PORT VILA
(Appellate Jurisdiction)
 
Appeal Case No. 9 of 2001
 
BETWEEN:
 
Mr. BRUCE ROBERTSON
Appellant
 
AND:
 
LUGANVILLE MUNICIPAL COUNCIL
Respondent
 
Coram: Hon. Justice John von Doussa
Hon. Bruce Robertson
Hon. Justice Daniel Fatiaki
 
Hearing Date: 23 October 2001
Judgment Date: 1 November 2001
 
Counsel: Mr. Saling Stephens for the Appellant
Mr. Bill Bani Tamata for the Respondent
 
JUDGMENT
 
This is an appeal against a decision of a single Judge of the Supreme of Vanuatu which dismissed the Appellant’s claim against the Luganville Municipal Council (the Council), his former employer. The Appellant had alleged that his employment as Deputy Town Clerk of the Council had been unlawfully terminated in that no proper period of notice was given to him and that the proper legal procedures were not followed.
 
The Appellant sought the following declarations and orders against the council:-
 
1.                  A declaration that the Plaintiff is a permanent officer within the meaning of the Municipalities Act [CAP. 126].
 
2.                  In the alternative, that the Plaintiff was an officer, not able to be dismissed other than by giving of reasonable notice.
 
3.                  That the Plaintiffs be entitled to remain in his position until dismissed in accordance with the law.
 
4.                  An order for the reinstatement of the Plaintiff to the Luganville Municipal Council.
 
5.                  In the alternative, that the Plaintiff’s renumeration and other entitlements including outstanding entitlements since his purported dismissal to the date of judgment be paid to him.
 
His Lordship made the following findings of fact that have not been disputed on this appeal. The Appellant was appointed by the Mayor by letter dated 23rd March 1999 to the position of the Deputy Town Clerk. He was to be on probation for six months. At the end of that time his appointment was extended. The Appellant received a letter dated 26th October 1999 from the Town Clerk which read as follows: -
 
“RE:     PERMANENT APPOINTMENT.
 
Referred to the Council decision taken on the 8th of October 1999, that your terms of appointment on a probationary basis should have been ended on the September 1999.
 
However, you have proven your capabilities as Deputy Town Clerk beyond doubt.
 
Therefore the Council wish to confirm your permanent status as from today 25th of October 1999. Your salary will be 69,600 per month.
 
I would like to congratulate you on your permanent status and I hope to keep good working relationship.”
 
By letter dated 13th March 2000 the Plaintiff was advised that he was terminated in his employment effective on that date. A decision to that effect had been made by the Council at its meeting on 10th March 2000. The only reason given to the Appellant for his termination was that his position was a political post.
 
At trial the Respondent denied that the Appellant had been appointed as a permanent officer. The Council contended that the post occupied was a political post from which he could be dismissed at any time without giving any period of notice. His Lordship accepted this argument and found that the Appellant held his post only for so long as the political party running the Council for the time being remained in control, that is remained able to command the majority support of the membership of the Council.
 
 His Lordship accepted the evidence led by the Council that a Memorandum Of Understanding (MOU) had been signed by the Vanuaku Party (VP) and the Union of Moderate Party (UMP) on 2nd February 1999.
 
Clause 1 of the MOU which explained its purpose read:-
 
“1. REASON FOR A COALITION
 
WHEREAS:
 
(A)             The UMP contested the Luganville Municipal Council election held on 1st of February 1999 and won 4 seats of the total 13 seats.
 
(B)             The Vanuaku Party contested the Luganville Municipal Council election held on 1st February 1999 and won 4 seats of the total of 13 seats.
 
(C)             No single political party acquired sufficient number of seats to constitute simple majority.
 
NOW THEREFORE
 
(D)             The UMP and VP having signed an MOU on the 19th October 1998 to exercise the Executive Power provided under Article 39 – 46 of the Constitution, and desirous of forming a coalition at regional level have also agreed to jointly administer the Luganville Municipal Council.
 
(E) After serious consultations and negotiations the UMP and VP have agreed to the following terms and conditions pursuant to this MOU.”
 
By clauses 2 to 7 of the MOU it was agreed that the offices of Mayor and Deputy Town Clerk would be held by the VP from February 1999 to February 2001, and thereafter to the end of the term of the present council by the UMP. The offices of the Deputy Mayor and Town Clerk would be held by the UMP from February 1999 to February 2001 and thereafter to the end of the term of the present council by the VP.
 
On 15th November 1999 UMP gave one month’s notice to VP that they intended to terminated the MOU. On 15th February 2000 the Nation Unity Party (NUP) and Melanesian Progressive Party (MPP) signed another Memorandum of Understanding which concerned the running of the council in place of UMP and VP. Paragraph 9 of that Memorandum of Understanding provided for a change in the office of Deputy Town Clerk.
 
His Lordship held at it was these circumstances that led to the summary termination of the Appellant’s employment without any period of notice on 13th March 2000.
 
The Council is a body corporate established by Ministerial Order made under sections 5 and 6 of the Municipalities Act [CAP. 126]. The members of the Council are elected for four year terms by secret ballot of those within the municipality eligible to vote: see section 7. Decisions of the Council are made at meetings of the council members: see section 15. The Mayor is Chairman of meetings, but has no independent statutory authority to make decision on behalf of the Council: see sections 14 and 15. Section 20 of the Municipality Act gives the council discretionary power to appoint fit persons as officers. It reads:-
 
“(1)      A council may appoint fit persons, not being Councillors, respectively to be treasurer, medical officer of health and engineer upon terms and conditions as it may determine.
 
(2)       A council may appoint such other officers as it may consider necessary for the proper performance of the functions of the council upon such terms and conditions as it may determine and may define the powers and duties of such officers.”
 
Section 23 of the Municipalities Act empowers the Council to make internal regulations, to be known as staff regulations relating to persons in the service of the Council. Matters to which regulations may relate include the appointment, promotion, termination of appointment and dismissal of employees, the maintenance of discipline, disciplinary offence and the punishment in respect of disciplinary offences.
 
The Council issued the staff regulations known as the Luganville Municipal Council (Staff Regulation) by Order No.5 of 1989. Clause 2 of the Regulations contains extensive provisions regarding the appointment of Council officers. Clause 2 reads;
 
2. 1       (i)       Subject to the Act only citizens of Vanuatu shall be appointed to post in service of the Council.
 
(ii)               Notwithstanding paragraph 2.1(i), until a Ni-Vanuatu officer is qualified for appointment to post in the service of the council, a non-citizen officer may be appointed to hat post for a limited period.
 
2.2       (i)        The Council may on the advice of the Committee responsible for recruitment and appointment appoint temporary officers to a post in the service of the council.
 
(ii)               Any temporary appointment shall be for a specific purpose and shall contain the period of appointment and the level salary to be drawn by the temporary officer.
 
(iii)             Temporary appointment shall not be made for a period exceeding 12 months.
 
2.3     (1)         Subject to section 21 (22) of the Act, the Council may from employ such employees as may be necessary for the proper performance of the functions of the council.
 
(2)               Employees appointed under this section may be exempted from the conditions governing necessary, qualifications for employment in the service of the council.
 
2.4              Any recruitment notice for any post in the service of the council including temporary employment or any other employment shall be advertised publicly on the Council’s notice board and also on the Government news media.
 
2.5              Applications for appointment to posts in the service of the council shall be addressed to the Council. Each application shall be in duplicate and shall be accompanied by the following:
 
-                      birth certificate or statutory declaration in lieu,
-                      a certified copy of any certificate or references,
-                      a medical certificate
-                      where appropriate, a marriage certificate and children’s birth certificates,
-                      an official statement of police record or equivalent document.
 
2.6       (i)        The appointment of every officer including temporary officer and employee still be on probation for a period of six months commencing from the date on which such appointment is made.
 
(ii)       During the probationary period a contract of employment may be terminated by either party without notice at anytime.
 
2. 7 …… (not relevant)
 
Clause 9.4 of the Staff Regulations deals with the question of termination of employment. It reads:-
 
“The Service of an officer or employee may be terminated by giving due notice in accordance with the terms of his engagement, and if no period of notice is specified therein, by giving three months notice or three month’s salary in lieu of notice.”
 
His Lordship found that the post of Deputy Town Clerk had been advertised in accordance with Staff Regulation 2.4. Eight people applied in the manner required by Staff Regulation 2.5, but the Appellant was not one of those people. The Appellant gave evidence that he had in fact made a written application for the job but he was unable to produce a copy of that application. His Lordship rejected the Appellant’s evidence and held that the Applicant had been appointed even though he had not been one of the Applications for the position. His Lordship expressed his conclusion as follows: -
 
“None of those who applied was picked for the position of Deputy Town Clerk. The Plaintiff was appointed although he did not apply. In my opinion Mr. Bruce Robertson was a political appointee. He was appointed by the Mayor on 23rd March 1999. Appointments are made by the Council. The Mayor is not the Council. Decisions of the Council are executed through or by the Town Clerk as Chief Officer of the Council. The letter of 23rd March 1999 was copied to the Treasurer and the Town Clerk. That is a clear indication that the appointment was not made by the Council.
 
As regards his permanent status the Council decided that on 8th October 1999. Mr. Robertson had fulfilled his probationary period which ended on 8th September 1999. The Town Clerk himself wrote that letter. He wrote it on behalf of the Council as its Chief Officer. The Council at the time were elected members of VP and UMP having the majority and who were running the Council under the MOU signed by them on 22 February 1999. Under their arrangement. Mr. Robertson was to occupy the post of Deputy Town Clerk from February 1999 to February 2001. In my opinion that is the period which the Council had confirmed the Plaintiff to remain as Deputy Town Clerk for. That period was determinable by how long the parties running the Council were able to hold on together. In Mr. Robertson’s case the MOU came to end on or about 15th December 1999 because the parties to it were not able to hold on together.
 
In Mr. Robertson’s case the MOU came to an end on or about 15th December 1999 because the parties to it were not able to hold on together. Therefore two new Parties came up to run the Council with their strategies. It was impossible for the Plaintiff to remain in his post under a different arrangement by different parties not his own. If the Plaintiff has any claims at all then it is against his party and not the Council in my view
 
Conclusion.
 
I therefore conclude that the Plaintiff’s appointment was not permanent. The term “permanent” used in his letter of 26th October 1999 must be read to mean the period under which the Plaintiff held the post under the political arrangement on 22 February 1999.
 
His Lordship therefore held that the termination of the Appellant’s employment was proper in the circumstance. The Appellant’s claim was dismissed without it being necessary for his Lordship to consider allegations made at trial by the Council that the Appellant had committed disciplinary offences that in any event justified his summary dismissal.
 
The notice of Appeal contains three grounds:-
 
1.                  The Honourable Judge erred in fact and in law in failing to construe and give effect to the term “ permanent” in its literal and ordinary meaning.
 
2.                  The Honourable Judge erred in law in that his attempt to give a different meaning to a term of the contract amounts to rewriting a contract which was voluntarily made between two consenting parties.
 
3.                  The Honourable Judge heard in law in failing to decide and consider the disciplinary issues in so far as the principle of natural justice is concerned.
 
The Appellant developed these grounds in oral argument. The Respondent for its part sought to uphold the decision of the trial judge for the reasons he gave.
 
Under the first ground of Appeal the Appellant argued that the term “permanent” should be given its ordinary literal meaning, that is as descriptive of a situation intended to exist for ever, or not expected to change. In an employment contract it was argued that the expression described an engagement that was intended to the on going, subject only to termination on reasonable notice.
 
The meaning of “permanent” in the phrase “confirm your permanent status” as it was use in the Town Clerk’s letter of 26 October 1999 is to be understood in the context of the Staff Regulations which governed the appointment to a post in the service of the Council. Clause 2 expressly distinguishes between temporary appointment ( clause 2.2), and appointment on probation (clause 2.6), and implies that after a period of probation an officer of the Council then acquires a different status. In our opinion having regarded to the context in which the letter of 26 October 1999 was written “permanent status” described the status of an employee whose employment is continued after the successful completion of a period of probationary service. In this sense the Town Clerk’s letter confirmed that the Appellant had become a “ permanent” employee. However it does not followed that the Appellant’s employment thereafter was to continue for ever. Such an interpretation would be contrary to common sense and to clause 9.4 of the Staff Regulations which allow for termination of an officer on giving notice.
 
The Judge in reaching his conclusion emphasised the irregular nature of the Appellant’s appointment. It is clear however that his Lordship did not treat the fact that the Appellant did not apply for the position, and that he was notified his appointment by the mayor as invalidating his appointment to the office of Deputy Town Clerk. Whatever irregularity accompanied the Appellant’s engagement, his appointment as Deputy Town Clerk was ratified by the Council, first by paying his remuneration as it fell due, and then by confirming his permanent status at the end of his probationary period. Clearly there was a contract of employment as Deputy Town Clerk, and it necessarily follows that once his appointment was ratified the Staff Regulations had application to him.
 
The importance which his Lordship attached to the irregularity in his appointment was as evidence indicating the terms on which the Appellant was appointed, and in particular as indicating the contractual term that would govern the termination of his contract. The case at trial and before this Court was fought by both parties on the assumption that the MOU evidenced a valid and enforceable agreement. Neither party questioned the validity of the MOU. The trial Judge decided the case on this basis, and this court must do likewise. On the basis that the MOU was a valid agreement, the central issue at trial was whether the Appellant’s contract of employment was on terms of a political appointment that allowed for notice of immediate dismissal if control of the Council changed, or whether it was on the terms of a regular employee who, in the absence of any specific agreement about notice, was entitled to 3 months notice. In either situation termination would occur under Staff Regulation 9.4. In the former situation the “due notice in accordance with the term of his engagement” would be notice with immediate affect. In the later situation due notice would be three months.
 
Undoubtedly it was open to the trial judge to threat the irregularity in the Appellant’s appointment as indicating that the Council intended the terms of engagement to be those of a political appointment. However, counsel for Appellant has argued that the evidence at trial did not permit findings that the Appellant was aware of the Council’s intention and that he accepted appointment on the terms of a political appointee.
 
The case seems to have been conducted at trial on the basis that the existence of the MOU was common knowledge to everyone involved. In our opinion, against this background the irregularities in the Appellant’s appointment, particularly his appointment in the absence of a formal application, justified the findings and conclusion reached by the trial Judge. We are not persuaded that his Lordship erred in his conclusion that the Appellant was engaged as a political appointee, on terms that allowed notice of immediate termination if control of the Council changed.
 
In the course of developing his argument under the first ground of appeal, counsel for the Appellant contended that the Appellant served under two separates appointments with the Council, the first being the probationary appointment by the mayor, and the second being the appointment on “permanent status” made by the Council in October 1999. Counsel contended that even if the initial appointment had been as a political appointee, the second appointment was as a regular employee. In our opinion this argument is untenable. There was no evidence of a separate offer of employment in October 1999, no was there any evidence that the parties negotiated for a new contract at that time. The Council simply resolved to continue the Appellant existing engagement beyond the end of the probation period. There was only one engagement of the plaintiff, and if it was at the outset a political appointment it remained a political appointment throughout.
 
Under the second ground of appeal the appellant argued that the Judge’s interpretation of ‘permanent’ amounted to an unwarranted re-writing of the contract of employment. It follows from what we have already said that his Lordship did not fall into such an error. On the contrary, he held that although the Appellant’s employment was permanent in the sense that under Staff Regulations he was neither a temporary nor a probationary employee, his particular contract nevertheless provided for notice of immediate termination under clause 9.4.
 
The third ground of Appeal is misconceived. The trial Judge was not obliged to decided questions that were unnecessary to determine the outcome of the case. Once it was decided that the Appellant’s contract had been lawfully terminated, there was no need to consider the alternative ground of defence based on the alleged commission of disciplinary offences.
 
Although not specifically argued on the appeal, the claims for relief in paragraphs 3 and 5 of the Plaintiff’s original claim appear to reflect a common misunderstanding about contracts of employment. Although with other contracts the general rule is that a purported termination that is ineffective in law does not bring the contract to an end, and that rights may continue to accrue under the contract until it is lawfully terminated, that rule is modified in contracts of employment. Contracts of employment are subject to an exceptional principle, sometimes referred to as ‘no work, no pay’. The most comprehensive statement of this principle is that of Dixon J in Automatic Fire Sprinklers v. Watson [1946] HCA 25; (1946) 72 CLR 435 at 465 who said that a contract of employment:
 
“is commonly understood as involving no liability for wages or salary unless earned by service, even though the failure to serve is a consequence of the master’s wrongful act. It is, of course, possible for the parties to make a contract for the payment of periodical sums by the master to the servant independently of his service… But, to say the least, it is not usual. The common understanding of a contract of employment at wages or salary periodically payable is that it is the service that earns the remuneration and even a wrongful discharge from the service means that wages or salary cannot be earned however ready and willing the employee may be to serve and however much he stand by his contract and decline to treat it as discharged by breach.”
 
An employee who is wrongfully dismissed cannot recover wages after the date of his dismissal. The employee may have other remedies based on breach of contract, but in the present case the appellant’s employment was terminated lawfully that question does not arise.
 
As we have noted earlier, the case at trial and in this Court has been presented by both parties on the basis that the MOU was a valid and effective arrangement. Neither party argued that the MOU was invalid, and we have decided the appeal on the issues raised by the parties. However, it is important that we note that there are strong reasons to question the parties’ assumption that Memoranda of Understanding like those placed in evidence in this case are valid. This Judgment should not be taken to endorse their validity.
 
The strong reasons for doubting the validity of this kind of Memoranda of Understanding arise from the structure and purpose of the Municipalities Act. The purpose of the Act is to establish a system of efficient ongoing administration of local municipalities.
 
The Act provides for two levels of decision-making and control. One level comprises the councillors under the chairmanship of the Mayor: see Part III of the Act. The other level comprises the officers of the council under the supervision of the Town Clerk as the Chief Officer of the Council: see Part V of the Act. These two levels are complimentary, but nevertheless fundamentally different in one major respect.
 
The councillors and mayor are elected positions which are held only for limited terms at the end of which fresh elections are held. The Act contemplates that at the end of the terms of the councillors and Mayor there may be substantial changes at that level of the management of the Council. In contrast, the Act contemplates that the officers of the Council, like the general staff, will be appointed as normal employees of a corporate body, engaged under contracts of employment subject to the general law. The Act is drawn on the assumption that officers and staff will continue to hold their positions notwithstanding that the periodic election of councillors and mayor may bring about changes in their membership.
 
The Municipalities Act is based on the system of local government which developed in England under the Westminster democratic system of government. Under that system whilst the voting constituency may periodically change management at councillor level, the officers and staff (the public service) will hold ongoing positions. Those positions are generally said to be “permanent” ones, although the general law and specific contracts of employment will normally provide for termination on giving an appropriate period of notice.
 
Under the Municipalities Act, section 19 gives the charge custody and responsibility for all books records and other documents to the Town Clerk, thus recognising an administrative structure that assumes the Town Clerk will continue to hold office notwithstanding the changes of mayor and councillors which can occur at election time. The Act makes no provision for the termination of any officer at or following the time of elections. Section 24 provides for the establishment of a pension scheme for officers and staff retiring from the service of the Council. This is another indication that officers appointed under Part V of the Act are intended to remain in office notwithstanding periodic elections of councillors under Part III of the Act.
 
If the proper interpretation of the Municipalities Act is that officers shall hold their positions as regular employees whose service is to continue even though control of the Council at councillor level may change at election time, an agreement like the MOU under which political parties or elected councillors agree to change office holders in a council would be contrary to the Act, and therefore unlawful. The termination of an officer’s contract of employment pursuant to a MOU would be contrary to law, and the officer concerned would be entitled to damages from the Council for unlawful dismissal. The dismissed officer might also have an action for damages against the councillors concerned for unlawful interference with the officer’s contract of employment. The immunity from proceedings given to councillors by s. 67 of the Act for acts done in good faith in the execution of their duty does not apply to unlawful acts that are contrary to the duties imposed by the Act.
 
The MOU may also be unlawful in another respect. Regulation 29 (1) (c) of the Municipal Council Election Regulations provides:-
 
“A person commits the offence of bribery –
 
…………
 
(c) if before or during an election he directly or indirectly, by himself or by any other person on his behalf, receives, agrees or contracts for any money, gift, loan, or valuable consideration or any office, place or employment for himself or for any other person for voting or agreeing to vote or from refraining or agreeing to refrain from voting;”
 
The words underlined could be construed as applying to the parties to the MOU in so far as the MOU purports to pre-determine how votes will be cast in future elections for the positions of Mayor and Deputy Mayor during the life of the MOU.
 
Because the parties in this appeal have presented their cases on the basis that the MOU is a valid agreement it is not necessary for the Court of Appeal to rule on these issues, but it is important that we mention them so that this Judgment does not give the impression that it supports the validity of Memoranda of Understanding of the kind tendered in evidence before the trial judge.
 
For the reasons given, the appeal will be dismissed. Costs should follow the result of the appeal. The Appellant is ordered to pay the Respondent’s costs of the appeal.
 
Dated at Port Vila, this 1st day of November, 2001.
 
Justice von Doussa
Justice Bruce Robertson
Justice Daniel Fatiaki