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

Civil Case No. 37 of 2007

BETWEEN:

SIMON KELEP
Claimant

AND:

SOUND CENTRE
Defendant

Coram: Justice C.N. Tuohy

Counsel: Mr. Yawha for Claimant
Mr. Kalmet for Defendant

Date of Hearing:  28th March 2008 
Date of Decision: 14th April 2008

RESERVED JUDGMENT

Introduction

1.	This is a claim by a former employee for unlawful and unjustified dismissal and breach of his constitutional rights by his employer.

Facts

2.	The Defendant operates a retail store in Port Vila. The Claimant commenced employment there in 2000, initially as a security guard but he quickly became a member of the sales staff.

3.	Cruise ship visits are an important source of custom for the Defendant which remains open for business on Saturdays and Sundays when cruise ships are in Port Vila. The Defendant is a practising member of the Seventh Day Adventist Church, whose Sabbath is on Saturday, and he was resistant to working on Saturdays. It is that resistance which finally led to the termination of his employment which was communicated in a letter dated 11 December 2006.

4.	There is an issue as to whether it was a term of the Claimant’s employment contract that he work on Saturdays if required to. The Defendant asserted that it was. The Claimant asserted that the Defendant, knowing about his religious beliefs, had never required him to work on Saturdays until the period immediately prior to his dismissal. Therefore he argued (although not in those words) that it was a term of the contract implied by the conduct of the parties that he would not be required to work on Saturdays.

5.	There is no written contract of employment. There is no evidence of any oral term agreed when the employment commenced. There is nothing in the Employment Act which bears upon the issue, (Section 23 which the Defendant may not be aware of applies to Sundays and public holidays only). Therefore it is necessary to look at the conduct of the parties to ascertain whether any term can be implied from that.

6.	There was a conflict of evidence on the point. The Claimant maintained that he never worked on a Saturday throughout his employment but he did work on Sundays when cruise ships were in port. Mr. Campbell Beeson, the Managing Director of the Defendant from about August 2005, stated that the Defendant did work on cruise ship Saturdays until approximately 11 November 2005 when the Defendant’s premises were destroyed by fire. He acknowledged that after that date the Claimant did not work on cruise ship Saturdays.

7.	Luke Sadler, who was the Managing Director between February 2003 and June 2005 agreed with what Mr. Beeson said in his sworn statement which was that "after the introduction of the bonus system (for working on cruise ship days) Mr. Kelep began to work on those Saturdays which were cruise ship days and did so for approximately 4 years".
 
8.	However Mr. Sadler, who lives in Australia now, was not present in Court for cross-examination, notice having been given in terms of R 11.7(4). Mr. Yawha submitted that his sworn statement should not therefore by read. Mr. Kalmet submitted that pursuant to R11.7 (1), it became evidence when filed and had to be considered by the Court although he acknowledged that the weight to be given to it must be lessened by the fact that it was not subject to cross-examination.

9.	I consider that Mr. Kalmet’s position is legally correct: see Dinh v. Polar Holdings Ltd [2006] VUCA 24; CAC 016 of 2006. The Court must therefore take into account Mr. Sadler’s statement. However it cannot be given much weight in the absence of cross-examination. There was no chance, for example, to put to Mr. Sadler the proposition that although Mr. Kelep had worked on cruise ship days and received bonuses that may have been on Sundays only.

10.	Esmond Aru, who has been employed by the Defendant for about 15 years and is the Financial Controller responsible for payroll matters clearly stated during the course of his oral evidence that the Claimant did work on cruise ship Saturdays prior to the fire. He also confirmed that the financial records which would have confirmed the issue one way or another were destroyed in the fire.

11.	The conclusion I have reached is that on occasions the Claimant did work on cruise ship Saturdays prior to the fire. In reaching that conclusion I place particular reliance on the evidence of Mr. Aru who, because of his long service and his responsibility for payroll matters, was in a very good position to know and to remember. Further, although he is a longstanding employee of the Defendant, he also appeared in Court to be on courteous terms with the Claimant, so he is relatively independent.

12.	Nevertheless I am also satisfied that prior to about August 2006, when Mr. Beeson formally wrote to the Claimant about the matter, the Defendant in effect left it to the Claimant to decide whether or not he worked on a Saturday. There is no evidence that before then any complaint was made or warning given to him if he did not do so and I am satisfied that over the previous 6 years, mostly he did not work on Saturdays.

13.	The issue was brought to a head in the latter part of 2006. On 10 August 2006, Mr. Beeson wrote to the Claimant as follows:

"Re: Working Saturday 12 August 2006

It is a continued requirement that Sound Centre Ltd employees work outside of normal hours as part of our industry code – particularly when a cruise ship is in Port Vila.

This Saturday 12th August the Pacific Sun is in Vila and I request you to attend work on this day and any other Saturday requested of you by the Director.

There will be no special treatment of SDA Staffs or any others within this organization.

I look forward to your attendance on Saturday".

It is obvious from the terms of the letter that the issue had been previously raised.

14.	The Claimant did not attend work on 12 August or on any other Saturday thereafter. There was some subsequent discussion about the matter. The Defendant offered a redundancy package to all staff and I am sure that at this time it was made clear that work on weekends was a firm requirement for all staff, therefore any who were not happy with that could avail themselves of the package.
 
15.	There was another conflict of evidence about what the Claimant’s response was to that. Mr. Beeson said that he told him that he had discussed it with his family and had decided to accept the Defendant’s requirements because the livelihood of his family was important. The Claimant denied that. While there may have been a mutual misunderstanding, I think Mr. Beeson’s evidence is more likely on this point. If the claimant had made it clear at that time that he would not work on Saturdays, the issue would have come to a head then.

16.	In fact it did not finally come to a head until 7 December 2006, when the Floor Manager instructed the Claimant and other staff that they must come to work on the coming Saturday. The Claimant then wrote to Mr. Beeson asking for an exception on the basis of his religious beliefs and advising he would not in future work on Saturdays.

17.	Mr. Beeson replied by letter dated 11 December 2006 stating "I feel you would be better suited to a position outside of the retail sector generally. On this basis please consider your employment terminated and return your uniforms to collect your entitlement cheque on Tuesday".

18.	Another letter of the same date set out the calculation of entitlements as follows:

1.)	3 Months Notice	=	VT 120.000	
2.)	Holiday Pay = 5 days owing. 5 x 8hrs= VT 40 hours
Hourly Rate = 210.52 per hours x 40	
=	
VT 8.421	
3.)	Severance Pay = 6 years 5 months.

6 years x VT 20.000 = VT 120.000
5 months = VT20.000/12 x 5 = VT 8.333	

=	

VT 128.333	
4.)	Staff Account	=	VT 18.875	
	Total Settlement	=	VT237.879	

The last paragraph provided:

"Acceptance of this payment constitutes a full acceptance of you termination/resignation arrangements and that no further claims will be made against the Sound Centre Ltd or their management".

It was signed underneath by Mr. Beeson on behalf of the Defendant and by the Claimant.

19.	There was subsequent correspondence between the Claimant’s solicitor and Mr. Beeson in which Mr. Beeson wrote that the Claimant was not terminated on the basis of his religious views or because he was SDA but "rather for dissent and not following requests to work on a Saturday".

The Claimant’s Case

20.	The Claimant, in his counsel’s submissions, contends that this is a case of dismissal for serious misconduct and that the Claimant was not given the adequate opportunity required by s. 50(4) of the Employment Act (Cap.160) to answer the charges made against him. In making this submission counsel relies upon Mr. Beeson’s own letter stating that the termination was for dissent and not following requests to work.

21.	It is also submitted that any right to dismiss the Defendant was waived by virtue of s. 50(5) of the Act which provides that the right to dismiss for serious misconduct is waived if not exercised within a reasonable time. It is argued that the Defendant did nothing about the Claimant’s failure to work on 12 August 2006 or in the months thereafter and thus waived its right.

22.	The same view of the nature of the dismissal underlies a further submission based on Laws v. London Chronicle (Indicator Newspapers) Ltd [1959] 1 WLR 698 that wilful disobedience justifying dismissal must constitute a wilful disregard of the essentials of the contract, and that was not the case here.

23.	It is further submitted that a demand that the Claimant work on a Saturday constitutes a breach of Article 5 (1) of the Constitution and to rely on a refusal to comply with the demand to dismiss the Claimant makes the dismissal unlawful.

24.	Finally, the Claimant submitted that the Court should no longer apply the common law rule, recognized in Ridge v. Baldwin [1964] AC40 and characterized as permitting an employer to hire and fire at will without good reason, without giving a right to be heard and without a right of appeal. Instead the Claimant asks the Court to follow the lead of the National Court of Papua New Guinea in Sukurama v. New Britain Palm Oil Ltd [2007] PGNC 21 and hold that that rule no longer applies in modern day Vanuatu. 

25.	The Claimant also forestalled an anticipated argument of the Defendant (which never eventuated) that the signed agreement in the last paragraph of the second letter of 11 December 2006 amounted to accord and satisfaction preventing the Claimant from suing for more. The Claimant submitted (without opposition) that s 18(1) of the Employment Act nullified any such argument.

26.	As to the remedies sought, the claim asks for severance payment at 6 times the severance payment made (VT128,334 x 6 = VT 769,998), damages for breach of constitutional rights and general damages.

The Defendant’s Case

27.	The Defendant’s primary submission is that the common law position applies to termination, that is an employer may terminate an employment contract at any time and for any reason (or no reason at all) and there is no general requirement to accord the employee the procedural requirements suggested by the rules of natural justice. In support, counsel cited Ridge v. Baldwin (supra), Malloch v. Aberdeen Corporation [1971] 1 WLR 1578 at 1581 and Johnson v. Unisys Ltd [2003] 1 AC 518.
 
28.	Accordingly, it is submitted, provided the employer pays for the required period of notice and other entitlements provided by law, the employee cannot question the employer’s motive for terminating the employment or the process adopted by the employer.

29.	In any event, the Defendant’s counsel submits, the Claimant was not terminated for his religious beliefs but because of the Claimant’s refusal and/or inability to comply with reasonable demands as to his days of work. In those circumstances the termination was neither unlawful or unjustified.

30.	It was also submitted that even if the termination was "unjustified" in terms of s.56(4) of the Employment Act, the Vanuatu case law does not permit the Court to use s. 56(4) to grant something akin to aggravated or punitive damages and there is no basis for an increased severance payment under s. 56(4) or for common law damages.

31.	Finally it is submitted that the protections in the Constitution do not create any private cause of action for damages available to one citizen against another and the claim for damages for breach of Article 5(1) is misconceived.

Discussion

32.	There is a fundamental distinction between the termination of a contract by notice according to its terms and its termination by way of the summary dismissal of the employee for misconduct. This distinction is made clear by contrasting ss. 49 and 50 of the Employment Act.

33.	Section 49 provides:

49. (1) A contract of employment for an unspecified period of time shall terminate on the expiry of notice given by either party to the other of his intention to terminate the contract.

(2) Notice may be verbal or written, and, subject to subsection (3), may be given at any time.

(3) The length of notice to be given under subsection (1)-

(a) where the employee has been in continuous employment with the same employer for not less than 3 years, shall he not less than 3 months;
…………………………………………
(4) Notice of termination need not be given if the employer pays the employee the full remuneration for the appropriate period of notice specified in subsection 

(3).	

By contrast s. 50 (1) provides:

50. (1) In the case of serious misconduct by an employee it shall be lawful for the employer to dismiss the employee without notice and without compensation in lieu of notice.

34.	Under s. 49 either party may terminate the contract by giving the notice required of his intention to terminate the contract (or, if the employer, by paying the full remuneration for the notice period in lieu). Whether it be the employer or the employee who terminates the contract, no reason for termination is required. On the other hand, under s. 50 only the employer is able to terminate the contract by dismissal of the employee, it may only be done if there is serious misconduct by the employee, and it may be done without notice and without compensation. In addition the other subsections of s. 50 provide various protections for the employee including the right to be heard in relation to any charges against him.

35.	It is necessary to decide what took place in this case. Was it a termination by notice under s. 49 or a summary dismissal under s. 50? The crucial evidence is Mr. Beeson’s letter of 11 December which brought the employment relationship to an end. It made no mention of summary dismissal nor did it accuse the Claimant of anything which could be termed "misconduct". Rather it states that the Claimant can consider his "employment terminated".

36.	More importantly, the basis of the termination, payment of "3 months notice" together with severance pay, makes it clear that this was not a dismissal for serious misconduct under s. 50 but a termination by payment in lieu of notice under s. 49.

37.	That conclusion is not changed by Mr. Beeson’s later assertion that the termination was for "dissent" and not following requests to work. That was a rather slanted (and probably somewhat unwise) description of what was undoubtedly his real motive for terminating the contract: because the Claimant was not prepared to work on Saturdays. However the defendant’s motive for exercising its contractual right is not legally relevant. What is important is what contractual right it purported to exercise.

38.	That finding removes the foundation of the Claimant’s case. The arguments based on s. 50(4) and s. 50(5) of the Employment Act cannot succeed because this was not a dismissal for serious misconduct under s. 50. Nor does Laws v. London Chronicle (supra) assist the claimant. That was a case about what sort of conduct constitutes serious misconduct justifying dismissal.

39.	The PNG case of Sukurama is also of no help to the Claimant. In that case, the 	National Court essentially decided to no longer apply the common law rule that an employer could dismiss for misconduct without giving the employee an opportunity to be heard. The position in Vanuatu (as in most jurisdictions) is that that common law rule has already been abrogated by the Parliament in s. 50(2) – (5) of the Employment Act. In any event, though, the case relates to situations of dismissal for misconduct which is not the case here.

40.	The Claimant’s argument based on Article 5 (1) of the Constitution is completely misconceived. The Claimant has not been denied the freedom to practise his religion. He is entirely free to follow his religious belief that he should not work on his Sabbath. Indeed he has exercised that freedom. That does not mean that an employer whose requirements include Saturday work is required to employ or retain in employment someone who refuses, for whatever personal reasons, to work on Saturdays.

41.	In any event, the Defendant’s submission that the Constitution is not intended to confer independent rights on citizens enabling them to claim damages against other citizens is correct. This well established principle was explained by the Court of Appeal in Francois v. Ozols [1998] VUCA 5; CAC 155 of 1996 (25 June 1998).

Conclusion

41.	The Claim must be dismissed. The Defendant is entitled to costs to be agreed or fixed by the Court.

Dated at Port Vila, this 14th day of April 2008

BY THE COURT

C.N. TUOHY
Judge