Timbaci v Vanuatu Maritime Authority [2005] VUSC 109; CC 206 2004 (13 September 2005)

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IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

In a Supreme Court claim filed in November 2004, the claimant sought damages for unjustified and unlawful dismissal from his position with the defendant as acting Commissioner of Maritime Affairs.

Damages were sought in the basis of three alternatives. First, breach of contract, second, unreasonable notice, third, general damages.

The defendant, in an amended defence and set-off, denied that the termination was unlawful or unjustified and claimed that it was able to set-off any sum for which it might be held liable in the action because of the claimant's breaches of duty.

The defendant is an entity created by the Vanuatu Maritime Authority Act No. 29 of 1998. On or about 10 October 2001, the defendant employed the claimant from 15 October 2001 as an understudy to the Commissioner of Maritime Affairs of the Vanuatu Maritime Authority for a period of 4 years. (see contract pages 9-15 of document book).

In January 2003, the defendant recognized that staff members, including the claimant, were entitled to severance allowances on termination in accordance with the Employment Act [CAP. 160] at the rate of one month's salary per year. (see exhibit "B" to claimant's sworn statement.)

On 27 May 2003 the claimant was appointed acting Commissioner of Maritime Affairs for a probationary period of 6 months with his existing work contract continuing unabated. (see exhibit "G" to claimant's sworn statement)

On 14 August 2003, the defendant wrote to the claimant suspending his employment as acting Commissioner and deputy Commissioner of Maritime Affairs for one month which suspension was to be paused during his overseas course at the Maritime Inspection Training in Yorktown, Virginia, USA from 18 August 2003 to 29 September 2003. The grounds for suspension were that he had been incompetent, had continuously refused directions of the defendant and had brought the Authority into disrepute and had caused the Authority to seriously breach the Act. (see pages 19 - 20 of document book.)

On 17 October 2003, the defendant through its new acting Commissioner terminated the claimant's employment without further notice or compensation (see page 18 of document book).

It is in the light of that termination that the claimant has sued the defendant for wrongful and unlawful dismissal and for damages.

The hearing had been set for 3 days but in the event occupied 4 days. There was no time for counsel to make closing submissions on day 4 and accordingly I made timetable orders whereby the claimant could file and serve a closing address in writing and that the defendant could do likewise.

Before I deal with the submissions in detail, I note that in fact the defendant in its submissions conceded liability, quite rightly in my view, because the chairman of the defendant, Mr. Christophe Emelee, under cross-examination, had conceded that the defendant's board had not wished to terminate the claimant's total employment but only his position as acting Commissioner. The new Commissioner Mr. Less John Napuati had in fact in his letter of 27 October 2003 terminated the claimant's employment completely which was not the intention of the board. In passing it seems strange that a new acting Commissioner be given the role of terminating another acting Commissioner who had been suspended only.

In any event, the defendant conceded that the termination of the claimant for serious misconduct was a mistake and therefore liability was conceded but not on any basis that was actually pleaded by the claimant. The set-off had already been abandoned by the defendant during the hearing.

Accordingly, it is thus unnecessary to canvas the submissions of counsel in relation to the liability question.

In relation to quantum, counsel for the claimant submitted as follows in paragraph 61 of his closing: -

That submission appears to have certain inaccuracies and confusions. It seems to me that in paragraph 61 (a) the reference to 27 October 2005 should be 27 October 2003. Likewise in paragraph 61 (b) under the heading of severance, the date should be 15 October 2005. The multiplier of 48 in paragraph 61 (a) was puzzling at first but seems to represent the fortnightly payments rather than the monthly rate of VT350, 000. That also makes more sense of the severance payments being 2 months at VT350, 000. In fairness the matters were somewhat clarified in the Response Submissions by claimant.

The defendant's submissions as to damages tends to concentrate somewhat on matters of liability whereas the liability is clearly conceded.

The defence argued in relation to quantum that the claimant was only entitled to notice of termination of his original contract at the rate of VT250,000.

Other arguments were advanced to how the entitlement should be quantified and largely begged the question and overlooked the basic facts that the defendant had already conceded liability.

An argument was mounted that the original contract was void because it was in breach of section 15 of the Employment Act, which was not overridden by section 6 of the Act. It was argued that as the contract must be seen to be of unspecified duration any award must be zero due to lack of evidence.

The defence argued that there was not enough evidence upon which any assessment of special damages could be made and that the claimant would only be entitled as follows: -

The first matter to be dealt with is the defence submissions that the original contract between the claimant and the defendant is void as it breaches the specific provisions of section 15 of the Employment Act which provides as follows: -

Counsel for the defendant argued that the decision of the learned Chief Justice in Virelala v Air Vanuatu [1999] VUSC 15; Civil Case No 029 of 1997 (1 April, 1999), was wrong when His Lordship held that section 15 was a term of general application and section 6 was a term of more specific application and it was more beneficial to the employee to have a contract of 5 years (as it was in that case) than 3 years. His Lordship held that section 6, being the specific term overrode section 15 so that the contract for the five years stipulated was valid. Section 6 provides as follows: -

"Nothing in this Act shall affect the operation of any law, custom, award or agreement which ensures more favourable conditions in any respect than those provided by this Act."

With the greatest respect, I agree with the reasoning of the learned Chief Justice in the Virelala case. Also that approach has effectively been approved by the Court of Appeal in Air Vanuatu (Operations) Limited v Keith Molloy Civil Appeal Case No 19 of 2004 where, in relation to the calculation of severance allowances, the Court of Appeal said this: -

" Section 6 of the Employment Act provides that nothing in the Act shall affect the operation of any law, custom, award or agreement which ensures more favourable conditions in any respect to the employees concerned than those provided for in this Act.

We are accordingly of the view that there is no barrier in law or in principle which restricts the ability of an employer and an employee to make their own private arrangement with regard to a severance entitlement providing it does not in any way undercut or minimize the employee's entitlements under Part XI.

We hold that position notwithstanding the provisions of section 56 (5), which provides that a severance allowance payable under the Act is to be paid on the termination of the employment. A proper and adequate allowance paid earlier than that date could be more favourable from the point of view of an employee and therefore it might (be) permissible under the Act. "

I am of the view that a similar approach should be adopted in relation to the term of a contract. In this case, the contract of four years is more beneficial to the claimant and, in accordance with the above interpretation, the contract for the four year period is in my view quite valid.

Next the Court of Appeal in Melcoffee Sawmill Ltd v George [2003] VUCA 24; Civil Appeal Case No 18 of 2003 (7 November 2003) referred to the common law right to relief for the manner of dismissal. Here the claimant has admitted that the dismissal was unjustified. In Melcoffee the Court of Appeal said as follows: -

"There remains the question of whether there should be any further relief given to the Respondent for any loss of reputation and pain, suffering humiliation or the like. That is clearly not covered by s.56 (4). There was a paucity of evidence at the hearing as to this but common sense dictates that the Respondent suffered distress beyond that usually occasioned to someone in the sudden and unexpected termination of relatively long standing employment.

Under the principles of earlier cases such as Addis v. Gramophone Co. Ltd. [1909] AC 488 the courts have held that an employee cannot recover damages for the manner in which the wrongful dismissal took place, for injured feelings or for any loss he may sustain from the fact that his having been dismissed of itself makes it more difficult for him to obtain fresh employment. Malik & Mahmud v. BCCI [1997] UKHL 23; [1997] 3 WLR 95 departed somewhat from that by using an implied term of trust and confidence between an employer and employee. Breach of such term, the Court said, should result in damages to be assessed in accordance with ordinary contractual principles. Even more recently in Johnson v. Unisys Ltd. [2003] IAC 518 the Court concluded that Addis no longer stood in the way of the recovery of damages arising from the breach of an implied term of a contract of employment, even though the breach arose from the manner of dismissal.

Some Australian cases such as Sanders v. Snell [1997] 229 FCA. and Lamb v. Cotogno (1988) 164 CLRI have allowed damages for injury to feelings cause by insult, humiliation and the like by way of deterrence. The Supreme Court, Fiji Islands in Central Manufacturing Co. Ltd v. Yashni Kaut CA. CBV0010 of 2002 (24^th October 2003) decided that there is an implied term in the modern contract of employment that requires an employer to deal fairly with an employee, even in the context of dismissal, extended to treating the employee with appropriate respect and dignity in carrying out the dismissal. There the Court decided that the respondent was entitled to some compensation for the distress and humiliation that was needlessly inflicted upon him by his employer for the manner in which he was dismissed.

Although it was not an unjustified dismissal case, this court has already recognized implied terms in contracts of employment in awarding damages for breach of contract for fear and distress suffered in a riot in Vanuatu National Provident Fund Board v. Aruhuri & Ors. Civil Appeal Case No. 19 of 2001.

We have already referred to the approach in the Mouton case (above) and we are of the view that at common law there should be some recompense to an employee who has been unjustifiably and unexpectedly dismissed in the way that this Respondent was.

The Courts must be seen to mark their disapproval for bad business practices and unacceptable summary dismissals of the kind demonstrated in this case."

Clearly there was a breach of the claimant's contract by the defendant. As I have said more than once the defendant has admitted liability for the claim of unlawful dismissal, and a measure of damages consequent upon that to be paid by the defendant must be calculated. While I accept that the defendant might have obtained some alternative employment on his own admission after the dismissal, in my view that does not affect the award of damages which I am about to make. Furthermore the defence did not illicit any specific amounts that the claimant earned. In addition it was clear, as the claimant submitted, that there were no allegations either in pleading or at the trial that the claimant had failed to mitigate his loss.

The award of damages is based purely on the breach of contract of employment for the unexpired portion of the four year term. At the time of dismissal the claimant was employed as Acting Commissioner of Maritime Affairs (see letter of appointment of 27 May 2003 Exhibit G to claimant's sworn statement.) His salary was VT350,000 per month. While that was for a probationary period of 6 months it is pure speculation to assume that that employment would have terminated on the review date of 27 November 2003. The damages must relate to the salary at the time of termination, namely VT350,000 per month. Under that contract of employment there remained available to the defendant 24 months of employment less 12 days.

As to severance, I accept that S.56 (7) of the Employment Act provides that the calculation shall be the remuneration payable to the employee at the time of termination of the employment and that was VT350, 000 per month and for consistency that figure should also be used for the severance calculation. Counsel for the claimant accepted in submissions that in the circumstances the multiplier under S.56 (4) of the Employment Act Does not operate.

Clearly in the case of this claimant his actual dismissal on 27 October 2003 was a mistake on the part of his successor, Mr. Less John Napuati. The Board only ever intended to terminate the claimant's position as acting Commissioner and deputy Commissioner and not his employment with the defendant in total (see Annexure CE7 to sworn statement of Christophe Emelee and evidence of Mr. Emelee page 66 of notes of evidence). Mr. Napuati clearly misunderstood his instructions from the Board and terminated the claimant's employment completely.

In addition the Board had already appointed Mr. Napuati to the claimant's position before the claimant had been terminated from it and as a crowning insult used his successor Mr. Napuati to terminate the claimant from his job. I have no doubt that this behaviour on the part of the defendant was arbitrary, capricious and unacceptable and clearly breached the trust and confidence that should exist between an employer and an employee. I accept that the claimant had already been suspended but in my view he was treated abysmally and no doubt suffered distress and humiliation as a result of the way he was dismissed. That was demonstrated when he sought the refuge and solace of his home island. He was also given inadequate opportunity to respond at a specific time and place. There is ample justification for an award of common law damages.

Breach of contract from 27 October 2003 to 15 October 2005 being the balance of the contractual term:- 24 months @ VT350, 000 per month less 12 days	VT8,261,918
Severance from 15 October 2001 to 27 October 2003 one month's salary per year for two years and 12 days:- 2 months @ VT350,000 per month plus 12 days	VT 711,507
General damages for acknowledged unlawful dismissal	VT 750, 000
TOTAL	VT9,723,425 ============

I award interest at 5% per annum on the judgment sum from 27 October 2003 to the date of judgment and I further award costs in favour of the claimant against the defendant on a standard basis up to the hearing and on an indemnity basis during the course of the hearing as agreed or as determined by the Court.

Supreme Court of Vanuatu

Timbaci v Vanuatu Maritime Authority [2005] VUSC 109; CC 206 2004 (13 September 2005)