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

Civil Case No. 147 of 2006

BETWEEN:

JACQUELINE de GAILLANDE
Claimant

AND:

ANZ BANK (Vanuatu) LTD
Defendant

Coram: Justice C.N. Tuohy

Counsel: Mr. Ozols for Claimant
Mr. Rosewarne and Mr. Kalmet for Defendant

Date of Hearing: 4 and 5 June 2008 
Date of Decision: 1st August 2008

RESERVED JUDGMENT

Introduction

1.	On 3 August 2007, the Claimant was summarily dismissed from her employment as a senior officer of the defendant ("the Bank"). She claims the dismissal was unjustified and unlawful and she seeks damages and payments of various entitlements. The Bank denies any liability. It says that it was entitled to summarily dismiss the claimant because she was guilty of serious misconduct.

The Law

2.	In Vanuatu, the right to dismiss an employee for misconduct is regulated by s. 50 of the Employment Act [Cap.160]. It provides:

"MISCONDUCT OF EMPLOYEE

50. (1) In the case of a 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.
…………………..

(3) Dismissal for serious misconduct may take place only in cases where the employer cannot in good faith be expected to take any other course.

(4) No employer shall dismiss an employee on the ground of serious misconduct unless he has given the employee an adequate opportunity to answer any charges made against him and any dismissal in contravention of this subsection shall be deemed to be an unjustified dismissal.

(5) An employer shall be deemed to have waived his right to dismiss an employee for serious misconduct if such action has not been taken within a reasonable time after he has become aware of the serious misconduct".

3.	What amounts to "serious misconduct" is a question of fact in the particular circumstances of the case. Such circumstances will include not only the nature of the conduct in question but also the nature of the employer’s business and the position held by the employee. If the parties have agreed upon any particular obligations, then that will be important.

4.	While it may assist in cases of doubt to consider the case law as to the degree of misconduct which will justify summary dismissal at common law, the Court’s essential task is simply to decide whether the conduct in question amounts to "serious misconduct" in the natural and ordinary meaning of those words. Section 50 is a code for summary dismissal. Other related aspects of the section, such as subsections (3) and (4), do not represent the common law so it cannot be said that s. 50 is intended to be merely declaratory of the common law.

5.	The burden of establishing that the claimant was guilty of serious misconduct under s. 50 (1) rests on the employer to establish on the balance of probabilities: Government of Vanuatu v. Matthias [2006] VUCA 7; CAC 10/06 (1 June 2006). The serious misconduct must be such that dismissal is the only course which is reasonably open: s. 50(3). It follows also from s. 50(4), that in contrast to the common law position, the only misconduct which can be relied upon by the employer to justify the dismissal is misconduct known about at the time and in relation to which the employee has been given adequate opportunity to answer.

The Facts

6.	The claimant is now aged 54. She is a naturalized Vanuatu citizen of French origin. She and her family arrived in Port-Vila in 1959 when she was a little girl.

7.	On 1 October 1974, she commenced employment in Port Vila with Banque de l’Indochine, the original owner of the banking business now owned and operated by the Bank. Over the years since it has undergone several changes of name and ownership. The claimant remained in continuous employment with the business throughout.

8.	She was successful in her career. By the time of her dismissal she had reached a senior position with the Bank with the title, Manager Prime Banking. Prime Banking was established in an effort to maintain the Bank’s French customer base. As Manager, the claimant was responsible for servicing the banking needs of the Bank’s high net worth personal customers – Prime Customers as the Bank called them. She was also in charge of the Bank’s New Caledonia operations.

9.	The conduct which was the basis for the dismissal related to the affairs of one of those customers, the late Isabelle Ohlen who died on 24 December 2005 aged 78. The claimant was the executrix of her will and before her death was a signatory on her accounts at the Bank.

10.	It was the actions of the claimant around the time of Mme Ohlen’s death and in the period immediately following it which caused the Bank to dismiss her. However, the Bank only became concerned and started an investigation some time later, on 20 July 2007, when a complaint was made to the Bank by a lawyer acting for the relatives of Mme Ohlen.

11.	The investigation was intensive and culminated in the immediate dismissal recorded in a letter from the Bank’s Managing Director Gayle Stapleton dated 3 August 2007. In terms of specifying the conduct upon which the dismissal was based the letter referred only to "your actions and dealings in relation to the accounts of Isabelle Ohlen".

12.	However, that letter must be read in the context of a document headed "Serious misconduct allegations against Jaqueline de Gaillande", which was handed to the claimant on 1 August 2007. The contents are set out below: 

"Serious misconduct allegations against JDG

Contrary to ANZ/s Code of Conduct – Abiding the by the law, ANZ policies and this code.

1.	Did without unlawful (sic) authority withdraw funds from account #768856 in the name of Isabelle Ohlen (Deceased) for the benefit of Jacqueline de Gaillande and her family members. Transactions as follows;
•	28/12/2005 – AUD$12,478
•	28/12/2005 – VUT$1,000,000.00 (approx AUD$11905.00)
•	27/01/2006 – AUD $61,095.70
•	24/04/2006 – AUD $35,940.25
•	22/05.2006 – AUD $10,000.00
•	22/06/2006 – AUD $40,000.00
•	23/05/2007 – AUD $26,212.00
•	30/05/2007 – AUD $10,012.00
•	13/06/2007 – AUD $11,011.79

In addition to these withdrawals JDG redirected all interest payments from this account to #1062397. These actions amount to a prima facie case of conversion, contrary to the republic of Vanuatu Penal Code Section 122(1)

2.	Did fail to comply with ANZ policy in respect to deceased accounts and contrary to a direct instruction not to operate on the account.

3.	Did unlawfully and without authority, change the account name from Isabelle Ohlen to Jacqueline de Gaillande, contrary to ANZ policy.

4.	Did fail in her duty as executor of an estate and disperse (sic) funds prior to any grant of Probate by the Supreme Court of Vanuatu.

Contrary to ANZ’s Code of Conduct – Honesty and integrity

1.	On 30/12/2005 unlawfully changed account #768856 from Isobel Ohlen to Jacqueline de Gaillande.

2.	Fail to adhere to ANZ policy on deceased accounts in respect to account of Isabelle Ohlen.

3.	On 30/12/2005 – Ignored instructions not to operate on accounts of Isabelle Ohlen.
Contrary to ANZ’s Code of Conduct – Conflict of interest.

1.	Did fail to fully disclose her role as executrix of the estate of Isobel Ohlen and as person in charge of the accounts. This omission has the potential to cause considerable reputation damage, particularly in the French community of Vanuatu and New Caledonia."

It must be assumed that the actions and dealings in relation to Mme Ohlen’s accounts referred to in the letter are those specified in the document dated 1 August 2007.

13.	The Code of Conduct referred to was produced in evidence. It was issued in May 2005 under the hand of Michael Flower, who was Managing Director until early 2007. The Introduction states that the intent of the Code is to provide some basic guidelines to be used by staff in respect of their behavior and to resolve ethical dilemmas. It is also stated that any act of "moral turpitude" (including inter alia misappropriation) can result in disciplinary action.

14.	Specific provisions which may be relevant include:

"1.	 Honesty and Integrity

The officer shall at whatever time or times of the day or week as may be required from time to time diligently perform all duties and tasks (including any course of training prescribed by the Bank) which the Bank or any Authorised officers may verbally or in writing request, order or entrust the officer to perform and shall at all times comply with all the rules, regulations and instructions at any time laid down or given by the Bank for the guidance of its officers and relevant to the employment and appointment held by the officer.

1.b	Fraudulent Behavior 
Officers must not use Bank’s time, funds, property or customers in their personal gain or for the advantage of the friends and relatives.

1.c	Acceptance of Gifts or Favours
Officers may only accept a gift or form of entertainment if it is of nominal value only and totally justifiable in all circumstances. Avoid any bribe which can influence/impair your decision making powers. If unsure of acceptance/non-acceptance of gifts seek advice from your Manager.

3.	Conflict of Interest
The officer shall not without the prior consent of the Bank in writing become guarantor or become engaged, concerned or interested directly or indirectly and whether as principal, partner, director, agent or employee in any business whatsoever other than that of the Bank. The foregoing shall not prevent the holding by the officer of shares, unsecured notes, debentures of securities of any company or corporation.

3.b	Officers acting as Attorney
No officer of the Bank may take, hold or act under a Power of Attorney without the Bank’s consent."

15.	The final clause 10 provides:

"Consequences of Breaching the Code of Conduct 

If the standards of conduct as listed in the Code are breached, employees can face legal or disciplinary action by ANZ Bank or, in some circumstances, can be charged with a criminal offence.

If employees are unclear or unsure if their actions or decisions will breach the Code of Conduct, they should seek the advice of their Manager".

16.	Correspondence between Mr. Flower and the claimant in July 2005 demonstrates that she was aware of the Code of Conduct and he (and therefore the Bank) was aware that she held a power of attorney relating to and was a signatory for Mme Ohlen’s accounts amongst others and had been for years.

17.	In fact the claimant’s relationship with Mme Ohlen went back to the time when her family first arrived in Port Vila and became friends with the Ohlen family which was long established in the New Hebrides. As a small girl at boarding school in Vila she used to visit the Ohlen household and formed a relationship with Mme Ohlen which continued until the latter’s death. In the last few years of Mme Ohlen’s life, as she became debilitated by ill health, the claimant became increasingly involved in her care and support as well as attending to payment of her bills and banking requirements. Mme Ohlen’s only family consisted of her brother Jacques Ohlen and his wife, their 2 children and 4 grandchildren all of whom lived in New Caledonia or further afield. The claimant took on many of the duties which a daughter often undertakes in these circumstances. The evidence shows that Mme Ohlen was both close to and reliant upon the claimant in the period leading up to her death.

18.	The dispositions of property which Mme Ohlen made in the 2 months prior to her death are important. They were known to the Bank at the time of the dismissal and form the background to the events on which it was based. She returned from a stay in hospital at Noumea at about the beginning of November 2005. On 29 October 2005, while still at Noumea, she signed a Procuration Speciale, in effect an enduring general power of attorney, in favour of the claimant.

19.	Then on 4 November 2005 at Vila she made her last will in the presence of 2 witnesses, one being the Notary, Paul de Montgolfier. Apart from a specific bequest of her parent’s household chattels to her nephew Gilles Ohlen, she left the whole of her estate to her 4 grand-nieces and nephews, the grandchildren of her brother Jacques, in 4 equal shares. She appointed the claimant as her executrix, in default M. de Montgolfier. She forbade her brother Jacques from having anything to do with the estate. The claimant said that she learnt of her appointment some time after the will was signed.

20.	Mme Ohlen had a sum of just under AUD$300,000 in a 30 day term deposit account with the Bank, No.768856 maturing on 18 November 2005. This amounted to a substantial proportion of her estate but she also owned another term deposit account containing at her death nearly AUD$250,000 and a house in Vila and various chattels and a Vatu current account. She signed a note handwritten by the claimant on the Deposit Advice form and dated 10 November which instructed that on maturity the account was to be changed into a joint account in the names of herself and the claimant. This note was not processed for reasons which are unclear. The claimant denied Mr. Rosewarne’s suggestion in cross-examination that the note was written after 10 November.

21.	On 19 December 2005, 5 days before her death, Mme Ohlen signed a number of documents. One was intituled as a "Donation". Her signature on it is witnessed by her doctor, Dr. Bador and a mutual friend of both the claimant and Mme Ohlen, Janet Frouin, who was also an employee of the Bank. Although termed a Donation it was in legal effect a codicil to the last will of Mme Ohlen. The claimant said that she prepared it on instructions from Mme Ohlen. It made a number of specific bequests of chattels to various people, not Ohlen family members, apart from a bequest of the family jewels to her brother. It gave to the claimant, a couple of pieces of jewellery and ornament and Mme Ohlen’s car but also the duty of looking after her dog.

22.	She also signed a further document prepared by the claimant. It was headed "Instructions pour Jacqueline de Gaillande" and provided: 

"A partir du compte joint en AUD 768856 effectuer les opérations suivantes:
1)	Régler les dépenses relative à mes funérailles plus précisément mon rapatriement sur Nouméa dans le caveau familiale.
2)	Acheter pour Suzie un <lopin de terre> et lui faire faire une petite maison (grand maximum vatu 2.5 million en tout)
3)	Pour ma petite Betty que j’ai prise sous ma responsabilité lui assurer les frais de scolarité sur Vanuatu jusqu’a ce qu’elle quitte l’école (régler l’école directement).
4)	Pour Anais, la petite fille de mon petit cousin Bernard Rolland, mettre 1.5 million sur un dépôt à terme qui sera géré par Jacqueline de Gaillande jusqu’à sa majorité en cas de décès de celle-ci, Bernard assurera la continuité.
5)	Régler à mon personnel ce que je leur dois pour cessation d’activité: ancienneté etc)

Fait a port Vila le 19 Décembre 2005

Isabelle Ohlen
Pour acceptation des instructions ci-dessus detaillées: J de Gaillande."

It will be noted that there is no mention of the claimant nor any direction for the funds remaining.

23.	Mme Ohlen also signed a Bank form intituled "Informations sur transactions" and date stamped 19 December 2005. This form is required by anti-money laundering legislation to be completed before the opening of an account and contains a number of questions regarding the source and purpose of the funds. Question 6 is relevant. It asks for what purpose the funds in the account are destined. The answer handwritten by the claimant is:

"Education de Betty, achat d’un terrain pour Suzie Hotil et virement pour AnaÏs. Solde à conserver pour études (?) et voyage des enfants de Gaillande & JDG."

Directly underneath is Mme Ohlen’s signature. It looks on the photocopy of the form produced to the Court that the second sentence may have been added later. That is also suggested by the fact that its content is not included in the "Instructions pour Jacqueline de Gaillande". The claimant’s evidence confirmed it. She said that she wrote in the first sentence, then took it to Mme Ohlen who said "What about you?". The claimant said that at Mme Ohlen’s request she wrote the second sentence and Mme Ohlen then signed underneath at the claimant’s request. She rejected Mr. Rosewarne’s suggestion that the second sentence had been added after Mme Ohlen signed.

24.	The claimant said that initially Mme Ohlen wanted to put the term deposit account 768856 in her sole name but the claimant was not comfortable with this in case she died first so she proposed a joint account. This is corroborated by Mr. Flower who stated that he was informed by the claimant before Mme Ohlen’s death that she wanted to transfer some money into the claimant’s name. He recalled that the claimant said she was uncomfortable with that and thought it would be better to open a joint account instead. She said it was after Mme Ohlen received a further Deposit Advice and saw that the 10 November instruction had not been acted upon that the "Informations sur transactions" and signatory card were signed.

25.	Finally, there was a card signed on both sides by Mme Ohlen for the purpose of providing to the bank the authorized signatures for the new joint account. It refers to both the AUD Term Deposit Account 768856 and a Vatu Cheque Account 1062397. This card has a date stamp of 19 December 2005 on it and Goretti Tevilili’s signature as confirming officer. 

26.	The claimant said that on 19 December 2005 she gave the documents to Goretti Tevilili at the Welcome Desk at the Bank to process i.e. to change the Term Deposit account 768856 into a joint account. It was put to the claimant by Mr. Rosewarne that the documents were never lodged with the Bank on 19 December and he suggested the date stamps were retrospectively applied. The claimant denied this. Goretti Tevilili did not give evidence.

27.	There is also a Customer Instruction Letter handwritten by the claimant and signed by Mme Ohlen dated 21 December 2005 in French which (roughly translated) says:

"Subject: 768856
(To) ANZ Prime
Make this account into a joint account with Jacqueline de Gaillande in order to allow her to continue my work with my protégés and also to again say thanks for everything she has done for me these last ten years and what she will continue to do after my death."

28.	There is another Customer Instruction Letter produced which has been written on by a number of pens. It appears to have been initially filled in by the claimant with a green pen, instructing that Mme Ohlen’s other AUD Term Deposit account then containing about $246,000 be changed into a joint account with the claimant. It is dated 22 December 2005. In her sworn statement No. 2, the claimant described this as an 

"ANZ Internal document addressed to Ms. Goretti Tevilili who was at the time an ANZ Desk Officer." 

There was no cross-examination on this document. There was no explanation in the evidence of what the different entries on it mean. The account was never transferred into joint names. Rather in June 2006 it was closed and the proceeds paid in 4 equal shares to the accounts of the 4 beneficiaries under Mme Ohlen’s will. On the puzzling state of the evidence, I think it would be unsafe to draw any inferences or conclusions from this letter.

29.	On 23 December 2005, the claimant left Vanuatu to visit family in Australia. She had planned to return to work for a short period between Christmas and New Year’s Day because she could not get leave and then go back to Australia for another week or so.

30.	On 24 December 2005, Mme Ohlen died. Dr. Bador advised the claimant in Australia. The claimant said that she had not expected her to die before her return. The claimant returned as planned and went in to work on 28 December. She learned that the Term Deposit account 768856 had not been made into a joint account.

31.	On 28 December, the following transactions were carried out by Bank staff:

a)	Term deposit account 768856 was changed from a sole account in Mme Ohlen’s name to a joint account in the name of the claimant and Mme Ohlen
b)	A new Vatu account 1062397 was opened in the joint names of the claimant and Mme Ohlen. The claimant referred to this account as a sub-account to 768856 created on her instructions for the purpose of making necessary payments in Vatu such as funeral expenses.
c)	An amount equivalent to VT 1 m was transferred by her from account 768856 to account 1062397.

32.	Mr. Flower, the Managing Director, who was the claimant’s "boss" (to use the wording of her letter of appointment), was away in Australia on leave for about 2 weeks from 23 December 2005. In his absence, Marilyn Kalangis was acting Managing Director. The claimant stated in her evidence that on her return to the Bank after Christmas she told Marilyn Kalangis the papers for transfer of Account 768856 into a joint account had not been actioned. She said that Marilyn Kalangis stated that it was a Bank error and it would be rectified. It was implicit in her evidence that Marilyn Kalangis knew that Mme Ohlen had died. Marilyn Kalangis did not provide any evidence to the Court.

33.	Ellen Szeto, who was then Risk and Compliance Manager at the Bank, became aware of Mme Ohlen’s death at some point on or before 30 December 2005. The evidence indicates it was Marilyn Kalangis who first gave her the information. It was part of Ms. Szeto’s job to ensure that a "freeze" is put on the accounts of a customer who has died. She searched the computer system for accounts in the name of Mme Ohlen and located 768856, 1062397, 792958 and 1031404. She instructed another Bank employee, Maissa Alatoa to "freeze" these accounts in accordance with normal practice. She knew 768856 and 1062397 were joint accounts with the claimant but did not know they had been opened after Mme Ohlen’s death. Obviously no-one had told her.

34.	Ms. Szeto’s email to Maissa Alatoa giving instructions for the "freeze" was copied to the claimant and Marilyn Kalangis. A short time later, she sent a further email to Ms. Alatoa (copied to the same persons) instructing that the freeze not be placed on the Vatu account 1062397 and requesting that the claimant arrange to be a signatory on that account, which she had noticed had not been done. Ms. Szeto wrote her second email because the claimant told her that she was the executrix of the estate and needed to pay funeral expenses from the account.

35.	30 December 2005 (like 23 December) was a Friday. The claimant returned to Australia that day for New Year. In early January 2006, she went back at work. She continued to draw cheques on Vatu account 1062397 for expenses relating to Mme Ohlen but by 27 January 2006, there was virtually nothing left in it.

36.	On that day, the claimant arranged by email to meet with Mr. Flower. Her invitation message read: 

"Need to sort out issue with joint account I have with Miss Ohlen that is now freezed (sic) while I have bills to pay for her".

 Obviously this related to account 768856. Mr. Flower has no specific recollection of the meeting but believes that he may have advised the claimant that she could not open a joint account with someone who was dead. He also stated that it is possible that he indicated to the claimant that funds would normally be available for funeral expenses but had no specific recollection of approving access to Mme Ohlen’s account.

37.	However Ellen Szeto herself allowed the freeze on account 768856 to be lifted on that same day 27 January 2006, for the purpose of allowing the claimant to pay funeral expenses after the claimant confirmed she was executrix of the deceased’s estate and produced a copy of the will which was put on file. On the same day, the claimant arranged the transfer of a further VT 5 m from account 768856 to Vatu account 1062397. This was used principally to pay Mme Ohlen’s New Caledonia hospital bill and other expenses related to her.

38.	On 30 January 2006, account 1062397 was changed into the sole name of the claimant and on 6 February 2006 account 768856 was changed into the sole name of the claimant. The operator who carried out the latter change was one of the claimant’s subordinates and it can safely be inferred that the claimant authorized both these changes following her meeting with Mr. Flower. On 20 February 2006, the claimant arranged for the interest on the term deposit account 768856 to be redirected to account 1062397.

39.	On 24 April 2006 probate of Mme Ohlen’s will was granted to the claimant. On the same day AUD$35,940.25 was transferred from 768856 to 1062397. Subsequently on 22 May 2006 AUD$10,000 was transferred to 1062397, on 22 June 2006 AUD$40,000 to the claimant’s own account, on 20 February 2007 AUD$15,012.07 to an Australian account of the claimant’s son, Fabien de Gaillande, on 23 May 2007 AUD$26,212 to an Australian account of M&P de Gaillande, on 30 May 2007 AUD$10,012 to the claimant’s credit card account, on 13 June 2007 AUD$11,011.79 to an Australian account of Pascal de Gaillande. All these payments were acknowledged to be for the benefit of the claimant or her children.

40.	Immediately after receiving the complaint from the lawyer acting for the Ohlen family, Gayle Stapleton spoke to the claimant. She acknowledged using funds in 768856 for the benefit of herself and her family but maintained that she was entitled to do so because Mme Ohlen had authorized it. That is a position that she has maintained throughout. She did indicate that she had felt uncomfortable about disclosing to the Ohlen family what had happened and it seems had wanted to keep from them the existence of account 768856 which on the claimant’s position was not an asset of the estate. She indicated a wish to reimburse the funds used before providing account statements to the Ohlen family lawyer.

41.	The same day, Mrs. Stapleton got in contact with David McGowan, Head of Investigations for the ANZ Banking Group based in Melbourne who later took a direct part in the investigation. On 23 July Mrs. Stapleton and James Campbell, the current Risk and Compliance Manager, had a further 2 meetings with the claimant at which further information and explanations were provided.

42.	Then on 26 July, a formal interview was conducted at the office of the claimant’s lawyer Mr. Ozols by Mr. McGowan and Mr. Campbell. This was taped and the transcript is in evidence. It was a lengthy and detailed interview. Then on 27 July, a second formal recorded interview was conducted again at the office of Mr. Ozols. He was present throughout both interviews.

43.	Following these interviews and other enquiries, on 31 July 2007 Mr. McGowan provided Mrs. Stapleton with a 6 page Memo reporting on his investigation. It is plain that it formed the basis for the allegations of misconduct set out in the document given to the claimant on 1 August. Mr. McGowan’s report ends: 

"JDG’s claim of right is not supported by any document or witness and cannot be relied upon as a legitimate defence in these matters.

Recommendation

There is sufficient available evidence to prove that on 9 separate occasions, since 28 December 2005, Jacqueline de Gaillande had withdrawn funds on the estate of Isabelle Ohlen without any lawful authority to do so. She has failed to adhere to ANZ policy on managing deceased accounts and ignored written advice to refrain from acting on the accounts. She initiated a change in the account name from Isabelle Ohlen to her own without any authority.

These are clear and deliberate breaches of ANZ’s Code of Conduct, at Part 1 – Honestly and Integrity,. Part 4 – Conflict of Interest and Part 5 – Abiding by the law and this Code.In the circumstances the appropriate outcome is summary dismissal on the grounds of serious misconduct".

44.	On 1 August, the document containing the allegations was given to the claimant by Mrs. Stapleton. She gave the claimant until close of business on 2 August to respond. A further meeting was arranged for 3 August. At that meeting, the claimant provided a 2 page account of events. She maintained that she had specific instructions from Mme Ohlen with regard to the funds in the term deposit account 768856 to pay for the funeral, buy a piece of land for the house girl, arrange a term deposit for Anaïs, pay the school fees of Betty and whatever remained was to be the claimant’s. She stated that when she returned to Vila after Christmas she found the joint account document received by the Bank on 19 December 2005 had not been actioned and that the transactions then undertaken had been done in good faith and under good authority . She stated that when asked for joint account statements by the lawyer she considered it her own business. She said she would give a final account to the estate beneficiaries on completion of the administration. She stated:

"I did all this in good faith, being sure and certain I was acting in line with Ms. Ohlen’s instructions and wishes. I never thought this would breach any bank procedures or regulations".

45.	She also provided some statements from people who knew Mme Ohlen supporting her claim that Mme Ohlen wanted her to benefit personally. There was also a note from the Notary Paul de Montgolfier relating to the French law regarding joint bank accounts. A short time later, a letter arrived from Mr. Ozols asserting that a valid inter vivos gift had been made, taking exception to the allegation of conversion or other offending and to any suggestion she had failed in her duty as an executrix.

46.	After taking into account all the various information she had acquired, Mrs. Stapleton decided to summarily dismiss the claimant and did so verbally later in the afternoon after which the dismissal letter was prepared and given to the claimant.

Discussion

47.	The misconduct alleged against the claimant can be categorized under 3 broad heads:

a)	Dishonesty – in transferring the Term Deposit account 768856 into joint names after Mme Ohlen’s death and then misappropriating the funds in the account for the benefit of herself and her family. It is implicit in this charge that since the account was in Mme Ohlen’s sole name at the date of her death, it became the property of her estate and the claimant knew it. Integral to the charge of dishonesty is that she concealed the true position from her superiors.
b)	Failing to adhere to Bank policy on the creation of joint accounts and the handling of deceased’s accounts.
c)	Disobeying instructions not to operate on the accounts of Mme Ohlen.
Although in a sense separate heads of misconduct, in the context of the accusations against the claimant the allegations in (b) and (c) are tied into the primary charge of dishonesty. In other words, they were part of a dishonest course of conduct.

48.	In cross-examination at trial, the Bank’s counsel went further than the original allegations. Some of his questions suggested that the claimant’s evidence that Mme Ohlen had intended to benefit her by giving her and her family the greater part of the funds in Account 768856 was untruthful; that her evidence that the transfer documents were given to Goretti Tevilili to process on 19 December was also untrue (which Gayle Stapleton also suggested); and that some of the documents were retrospectively dated, created or altered.

49.	These allegations were not the basis of the dismissal. The dismissal was based upon the charges set out in the document given to the claimant on 1 August 2007. They all relate to events after her return to work after Christmas 2005. They do not involve allegations of falsifying documents.

50.	I do not therefore propose to make any findings in relation to the additional issues raised by the Bank’s counsel. It would be wrong to do so when they were not raised at the time of dismissal and are not raised on the pleadings. I am conscious that there are other proceedings before the Court brought by the beneficiaries of Mme Ohlen’s estate where at least some of those matters will be directly in issue. I do not intend to prejudge them in any way. Whether the claimant was guilty of serious misconduct must be judged on the basis of the charges made against her at the time. I assume for the purposes of this case that the documents which contain Mme Ohlen’s signature have not been falsified.

51.	If the evidence does establish dishonesty in the ways alleged, then there is no question that it would be serious misconduct and summary dismissal would be the only possible course open to the Bank. That needs no discussion. No bank can be expected to tolerate a dishonest employee at any level. If, however, it is solely a matter of breaching Bank policy or disobeying an instruction without any associated dishonesty, then it would be necessary to consider whether any misconduct should properly be categorized as serious and if so, whether any course other than dismissal might have been available.

52.	The primary charge in this case is that the claimant acted dishonestly and unlawfully by procuring a change of account 768856 into joint names after Mme Ohlen’s death, then procuring a further change into her own sole name, then withdrawing the contents of the account for the benefit of herself and her children. Dishonesty is a subjective concept. It is a question of whether the claimant herself believed that what she did was honest. However, often that question cannot be decided without considering the legality of what was done. Perceptions of legality underlie the assessment of dishonesty.

53.	In this case, it is clear that the Bank in the persons of Mr. McGowan and the ultimate decision maker, Mrs. Stapleton, took the view that once Mme Ohlen died, any unexecuted instructions by her to change account 768856 into joint names became void and ineffective. Therefore the account passed to the estate. That is clear in Mr. McGowan’s case from his questions in the formal interviews and his report to Mrs. Stapleton. It is clear from Mrs. Stapleton’s evidence and her decision that she concurred with this view. Viewed from that perspective, it is not hard to see that the claimant’s assertion that she was acting honestly cut no ice.

54.	However, the assumption underlying that perspective is not one which would be made so readily by anyone with knowledge of the common law applied in Australia, New Zealand and Vanuatu. It is well established that the beneficial ownership of a bank account can be transferred simply by conduct which evidences an intention by the owner to transfer ownership. It does not require that the name on the account at the Bank is changed before beneficial ownership passes. A beneficial owner can require that to be done later.

55.	Whether account 768856 passed into the beneficial joint ownership of the claimant and Mrs. Ohlen before the latter’s death is not something which needs to be decided in this case. It may even be a question to be decided under French law not the common law. What is important is what the claimant believed. In my view, it is quite credible that she might have genuinely taken the same view that the common law may well take – that the beneficial or real ownership passed when Mme Ohlen signed the note on the Deposit Advice on 10 November or at latest, when she signed the documents on 19 December which were intended to change the names on the account at the Bank. In that light what has to be done later is only administrative. 

56.	There is another aspect of legality which underpins the assessment of dishonesty in this case. That is the application of funds in a joint account on the death of one of 2 joint owners. It is apparent from Mrs. Stapleton’s diary note of her first meeting with the claimant about this matter that she thought that the matter would depend on the will of the deceased but that standard practice would be an equal distribution between the surviving account holder and the deceased’s estate. From that perspective, the claimant could never justify the transfer of account 768856 and sub account 1062397 into her sole name and the disbursement of most of the contents to herself and her family.

57.	However in her evidence and in her answers at interview the claimant made it clear that at the relevant time, before she was influenced by M. de Montgolfier’s advice about French law, she thought that on the death of one joint owner the whole of the account automatically became the property of the survivor, and did not pass under any will of the deceased. As far as the common law as applied in Australia, New Zealand and Vanuatu is concerned, the claimant’s understanding at the time is quite correct and Mrs. Stapleton’s understanding quite wrong. Under the common law, the most important characteristic of joint ownership, whether of a bank account or anything else, is that property in the item does not pass under the will of a deceased owner, but passes "by survivorship" to the surviving owner. Ironically, M. de Montgolfier’s advice, which was exhibited, indicates that Mrs. Stapleton’s understanding appears to roughly represent the French law on the subject.

58.	Again for the purposes of this case, it is not necessary to decide what the correct law was for this account. The issue is whether the claimant could have been acting honestly when she undertook the transactions in question. In my view, it is quite credible that she had the understanding which she says she had. She lives and works in an environment where, for better or worse, the law as it is understood in Australia and New Zealand is dominant. It is not surprising that she has absorbed an understanding of that law. Under that law, the property in a jointly owned bank account passes automatically on the death of one owner to the other(s).

59.	It is an integral part of the Bank’s charge of dishonesty in regard to these transactions that the claimant hid the true position from other Bank officers especially her superiors. There is no credible evidence of that. The first point is that, as Mr. Flower confirms, she told him, the Managing Director, before Mme Ohlen’s death that Mme Ohlen wanted to put some money into her sole name but as she was uncomfortable about it, thought it better to have it in joint names. Secondly, the evidence indicates clearly that Marilyn Kalangis, the acting Managing Director at the time the account was made joint, knew that Ms. Ohlen had died and knew that the account was being transferred into joint names. Thirdly, all the transactions were physically carried out by other staff or with the help of other staff. Although, necessarily they were not the claimant’s superiors, they all must have known at least some of what was being done. Next, all the transactions were there to be seen on the computer system and in the files as later transpired.

60.	The implications in the sworn statements of Ms. Szeto and Mr. Flower that the claimant withheld the true position from them do not withstand scrutiny. Ms. Szeto states in paragraph 9 of her sworn statement that 

"Mrs. De Gaillande did not alert me to the fact that she had only recently opened accounts with the deceased at this time"

 and goes on to say that if she had known it was after death she would have further investigated. It was not the claimant who advised Ms. Szeto of the death, it was Marilyn Kalangis who also knew when the account was made joint (see Mr. McGowan’s report). It was for her to tell Ms. Szeto, if anyone should have.

61.	In paragraph 9 of his sworn statement, Mr. Flower stated that he recalled an enquiry by the claimant about opening a joint account in Mme. Ohlen and her names given that Mme. Ohlen had died, and during this conversation he advised the claimant that she could not open an account with someone who was deceased. He stated that his advice was provided in the belief that the account in question was already opened in the claimant’s name.

62.	The first point is that this conversation must have taken place after account 768856 had been made joint on 28 December because Mr. Flower was in Australia then and did not return until the second week of January. It was probably at the 27 January meeting with the claimant. It was following this meeting that the joint accounts with the deceased Mme Ohlen were changed to the sole name of the survivor, the claimant. 

63.	Secondly, his statement that his advice was provided in the belief that the account in question was already opened in the claimant’s name does not sit well with the meeting invitation message sent to him by the claimant. 
"Need to sort out issue with joint account I have with Miss. Ohlen which is now freezed….."
 His statement is carefully expressed. He does not state that this belief was brought about by anything the claimant said. It is clear from his evidence that Mr. Flower did not take a close interest in this matter at the time and his recollection of events is not strong.

64.	I have come to the conclusion after carefully reviewing all of the evidence now available that the Bank’s judgment that the claimant acted dishonestly in these transactions and may have been guilty of criminal offences is not supported by the evidence. It was based upon incorrect assumptions about the legal position and in some respects a mistaken understanding of the facts.

65.	Conflict of interest is another matter. From the moment that Mme Ohlen indicated an intention to transfer the term deposit into the claimant’s name or into their joint names, the claimant was in a position of potential conflict. Sole or joint, the claimant became the beneficiary of a large gift from a bank customer whose accounts she controlled. The account itself became in substance the claimant’s own account.

66.	The conflict of interest got even worse when the claimant became aware that she had been appointed executrix of Mme Ohlen’s will. It is obvious that the beneficiaries of the will would have great suspicion if they learned that a substantial part of the deceased’s property had been purportedly given to the claimant within a very short time of death. It is the duty of an executrix to ensure that all possible assets of the deceased’s estate are collected, and also her duty to fully account to the beneficiaries. Here because she was the beneficiary of this large gift made in circumstance which would inevitably raise suspicions, she had no interest in looking at whether it could be challenged for the benefit of the estate. On the contrary, she was concerned to conceal it as far as possible from the beneficiaries in whose interests she was required to act.

67.	The conflict of interest situation with the beneficiaries was intimately tied up with the claimant’s employment with the Bank because it involved a bank account of which the claimant was a signatory prior to Mme Ohlen’s death and which she had control of throughout. 

68.	The claimant could and should have done a number of things which she did not do. She should have:

a)	ensured that the documentation relating to the transfer of the account into joint names and the application of the funds in it was prepared and explained to Mme. Ohlen and her signature obtained by someone independent. The notary would have been an obvious choice.
b)	declared the gift to the Bank in detail and in writing and discussed with her Managing Director whether she should remain a signatory on the account.
c)	declined to act as executrix of the will or at the least made full and open disclosure of the gift to the beneficiaries.

69.	Most of the other charges contained in the document given to the claimant on 1 August 2007 fall away on close scrutiny of the evidence. Some of the factual detail set out in the report on which it is based is not supported by the evidence. The charge that she unlawfully and without authority changed account 768856 from Isobelle Ohlen to Jacqueline de Gaillande is not established. If this refers to the change into joint names on 28 December, it is not shown to be unlawful in the sense of criminal. It is not without authority from Isabelle Ohlen if the documents she signed are accepted as genuine. As to compliance with bank policy, that is discussed below.

70.	The charge that she failed in her duty as executrix and disbursed funds prior to grant of probate rests on the assumption that the account 768856 formed part of the deceased’s estate. That is not established at this point. It depends on whether there was an effective assignment before death or not; or possibly it depends on French law. In any event, for the reasons set out above, I am not satisfied there was deliberate wrongdoing by the claimant in this respect.

71.	The charge that on 30 December 2005, she unlawfully changed account 768856 from Isobelle Ohlen’s to the claimant’s name is factually incorrect. The account was changed to the claimant’s sole name on 6 February 2006. I am satisfied that that was as a result of Mr. Flower’s advice that it was not possible to open a joint account with a deceased person. If the account was joint in equity at date of death, it could have been changed into the name of the survivor as soon as proof of death was produced. Probate was not necessary. The position may be different under French law.

72.	It is difficult to see how there was any failure to adhere to ANZ policy on deceased accounts in respect to Isabelle Ohlen. The accounts which were undoubtedly part of the estate remained frozen from 28 December 2005 and were not unfrozen until 22 May 2006 after probate was granted. They were then properly administered by the clamant and the contents eventually distributed to the beneficiaries under the will.

73.	The charge that on 30 December 2005 the claimant ignored an instruction not to operate on Isabelle Ohlen’s account is difficult to understand. Three accounts including 768856 were frozen that day. Account 1062397 was left unfrozen. These steps were taken by Ellen Szeto. The claimant did not try to operate on any of the frozen accounts until they were later unfrozen by Ellen Szeto. (In fact, through operator error, the freeze was never actually implemented but no-one knew this at the time).

74.	One issue of breach of Bank policy remains. It is not specifically set out in the document of 1 August 2005. It is the assertion that the claimant failed to follow Bank policy by changing 768856 into a joint account rather than closing it and opening a new joint account. An extract from the ANZ Group Manual was produced in evidence at trial. It states:

"Adding or Removing Names on Individual or Joint Personal Accounts

When customers wish to change an account from sole to joint or joint to sole, the existing account/s should be closed and new account/s opened.

Note: An exception is made for joint personal accounts where one of the parties to the account is deceased. In these instances the account may revert to the name of the surviving party without need for closure."

75.	It seems that process was not followed on 28 December 2005. It is hard to see though that the failure had any practical effect. There was a new signatory card filled in for the account. It is not clear what the operator’s responsibility was as opposed to the claimant’s. Presumably the operators are meant to know the rules in the Manual. There were others involved in the account maintenance necessary to change the account. It seems no one objected to the course taken. The claimant seemed unaware of the correct process. In summary I think it is not an issue of substance.

76.	It remains to consider whether the conflict of interest issues amount to serious misconduct. The wording of the Code of Conduct in relation to conflict of interest does not comfortably fit the way it has arisen in the case of the claimant’s involvement with the banking affairs of Mme Ohlen. But that matters little. The claimant is well aware that complete integrity is required by the Bank of its employees in relation to their own accounts and their relationships with the Bank’s customers. The claimant’s conduct in this respect was damaging to the relationship of mutual trust and confidence between employer and employee and potentially damaging to the Bank’s reputation.

77.	Ultimately whether particular conduct is properly categorized as serious misconduct is a matter of judgment. In my judgment, the claimant’s conduct in relation to the affairs of Mme Ohlen in allowing conflicts of interest with her duties to the Bank and to the estate to arise and then failing to take proper steps to resolve them did amount to serious misconduct.

78.	It remains to address s. 50(3) and (4) of the Employment Act. As to the latter, I am satisfied that the claimant was given an adequate opportunity to answer the charges against her. It is true that the charges were only given to her in writing on 1 August, 2 days before the dismissal. However there were several interviews with her prior to that which although partly investigatory were accusatory as well. By the time 1 August arrived it must have been obvious to the claimant that she was being accused of various wrongdoing in relation to the Ohlen accounts, in particular the use of the funds in 768856. So the written charges did not come out of the blue. She was given the opportunity and did answer them by providing a written explanation supported by statements from others and supplemented by a letter from her lawyer.

79.	Section 50(3) is more problematic. I am not aware of any reported decision in which it has been analyzed. It is clear from its wording that the fact that an employee has committed serious misconduct is not of itself sufficient to justify summary dismissal. An employer must also satisfy the Court that it cannot "in good faith" be expected to have taken any other course. The phrase "in good faith" is a colloquial expression which in context equates to "reasonably".

80.	I am not satisfied on the evidence that the Bank could not reasonably be expected to have taken any course other than summary dismissal. Of course the Bank saw the claimant’s actions as dishonest, possibly amounting to criminal offending and on that basis no other course of action could have been taken. But looking at the claimant’s misconduct as consisting of breaches of her duty to the Bank to avoid conflicts between her personal interests and those of the Bank and its customers it is not so clear that summary dismissal was the only outcome possible.

81.	She had been working for the Bank and its predecessors for 33 years and there is no evidence that at any previous time her integrity had been impugned. On the contrary the evidence is that she had been promoted by the Bank to a senior position and commended for her efforts. Additionally Bank management was to a degree aware of the circumstances which created the conflicts of interest but made no objection or enquiry. Mr. Flower knew that the claimant held a power of attorney over Mme Ohlen’s accounts, knew that Mme Ohlen wanted to put money into an account in the claimant’s name and knew she had made the claimant a joint owner of one of her accounts. He made no objection to that or any further enquiry. It is likely he knew that the claimant was the executrix of Mme Ohlen’s will and he certainly knew she had died. Marilyn Kalangis knew that Mme Ohlen had died and her term account made joint with the claimant after her death. Ellen Szeto knew that the claimant was the executrix of the estate and held a joint account with her. For the reasons set out above, I do no think the claimant actively concealed the position from Bank management. 

82.	No doubt because of the view the Bank took of the claimant’s conduct, there was no evidence of what other options apart from dismissal may have been available. However it is obvious that an employer in dealing with an employee guilty of misconduct has other options ranging through counseling, further training, a formal warning, transfer, loss of seniority, demotion and loss of bonuses or any combination of those.

83.	On the view which I take of the nature of the claimant’s misconduct, it is not clear to me from the evidence that the Bank could not reasonably have taken one or more of those options; in other words that summary dismissal was the only reasonable option. I therefore conclude that in terms of s.50 of the Employment Act, the summary dismissal of the claimant was unlawful.

Remedies

84.	The amended claim seeks payment of a number of different sums including annual leave, sick leave, arrears of salary, payment in lieu of notice, severance allowance for 33 years, interest, damages equivalent to one years’ salary for ill treatment and arbitrary termination, aggravated damages for humiliation and mental anguish and other miscellaneous amounts.

85.	Two heads of claim flow automatically from the provisions of the Employment Act. The first is payment in lieu of notice under s.49 of the Employment Act. This was a contract for an unspecified period terminable on 3 months notice. The claimant is therefore entitled to a sum equivalent to 3 months remuneration. All the necessary information to calculate this is in evidence but the Court needs help to interpret it. 

86.	In addition, the claimant is entitled to severance pay in accordance with s.54 (1) of the Act. Two issues arise, first, how long the claimant had been in continuous employment having regard to s.54 (2) (c); secondly, what sum, if any, should be paid under s.56 (4).

87.	As to the first issue, it seems to be common ground that the claimant was in the continuous employment of the predecessors of the Bank up until the employment agreement of 1 October 1999 with the Banque d’Hawaii. That provided in Paragraph 9:

"EMPLOYMENT ACT
The provisions of the Employment Act No.1 of 1983 shall apply to this agreement provided that all entitlements which may be available to the Employee pursuant to the Act shall apply only from commencement date of this Contract, all previous entitlements to date of commencement having been paid out in full provided that the Bank will abide by any Court ruling or valid legislation which deems the deducted severance pay, VNPF and other entitlements to be payable to the employee."

88.	The evidence filed by the Bank implies that it is the Bank’s position that this meant that the claimant had received severance pay up to that time. However in Paragraph 24 of her first sworn statement the claimant denied that. Mr. Flower’s letter to the claimant of 24 January 2007 attached to her sworn statement No. 3 suggests the Bank accepts severance payments for staff going back before 1999 but it is not clear whether this includes ex Banque d’Hawaii staff. In his submissions the Bank’s counsel reserved his right to make further submissions on the point. Neither party made specific submissions on the point in closing. The Court needs the benefit of further submissions.

89.	As to the second issue, s. 56(4) has been discussed by the Court of Appeal on at least 3 occasions. In Banque Indosuez Vanuatu Ltd v. Ferrieux [1990] VUCA 3, the Court stated:

"In our view section 56(4) does not give the court power to award a sum akin to aggravated or punitive damages, or for loss of career prospects.
It merely enables the Court to compensate an employee for any special damage which he has suffered by reason of an unjustified dismissal, if the basic severance allowance is insufficient for that purpose. The law presumes that a person should not be compensated twice for the same wrong, so that any award under this statutory head must be set off against any award of damages at common law.

The Chief Justice appears to have awarded damages under this head by reason of the manner of the dismissal. In our view that is not permissible and only the basic severance allowance should be paid."

90.	This reasoning was affirmed in Mouton v. SELB Pacific [1998] VUCA 8 (26 June 1998). There the Court said:

"The approach of the Chief Justice was in accordance with the decision of the Court of Appeal in /Banque Indosuez Vanuatu Limited –v- Ferrieux/(1992) 2 Vanuatu Law Reports 496. Counsel for Mr. Mouton invited the Court to revisit the construction of S. 56, and to depart from the decision in the /Ferrieux /case. We decline that invitation. On a matter of statutory construction we do not think that this Court should depart from one of its earlier decisions, except perhaps in an exceptional case where it is quite clear that the earlier decision is wrong. This is not such a case. On the contrary we agree with the decision.
...............

Whilst we agree with the decision of the Court of Appeal in the /Ferrieux /Case that S. 56(4) does not allow for an award of aggravated or punitive damages, the notion of compensation is a wide one. It may be that Section 56(4) is wide enough to allow the Court to have regard to distress, and even ill health, caused by the manner and circumstances of a dismissal."

The last paragraph can be seen as a softening of the narrow interpretation taken by the Court in Ferrieux. A further softening is indicated in the recent case of VBTC v. Malere & Ors. [2008] VUCA 2 (30 April 2008). There the Court said:

"There are two possibilities with regard to the meaning of Section 56(4).
In some cases it has been treated as a reflection of the circumstances which lead to the dismissal and in others it has been treated more as compensatory for a person who is unable to obtain work. Whether in this case it matters which of the approaches is adopted we do not know and, it is possible that under either approach a good case could be advanced...."

91.	The cases also affirm that the use of the word "shall" in s. 56 (4) requires the Court to order some additional severance pay where there has been an unjustified dismissal unless there has been an equivalent compensation in damages.

92.	I consider it open to the Court to allow additional severance pay for the manner and circumstances of the claimant’s summary dismissal. After 33 years, she was summarily dismissed on the primary basis that she had acted dishonestly in a way which may have amounted to criminal offending. That must have caused her great humiliation and distress. The Court has found that that basis for her dismissal was not made out.

93.	I consider she is entitled to some additional severance pay under s. 56(4) for that. However, I do not overlook the finding that the claimant was guilty of serious misconduct in other respects which could be said to relate to her integrity. Any additional severance pay under s.56(4) should be limited. I asses additional severance pay as if the claimant had been in continuous employment for an additional 2 years i.e. an amount equivalent to a month’s pay.

94.	Apart from those amounts, there is no proper evidential basis for an award of damages of any of the types sought.

Conclusion

95.	There will be judgment for the claimant for the following sums:

a)	3 months remuneration
b)	Severance pay under s.54(1) for the period during which the claimant is deemed to have been in the continuous employment of the Bank
c)	Additional severance pay under s.56(4) calculated as if the claimant had been in continuous employment for 2 years more than she had been.
d)	Costs to be agreed or fixed upon application

96.	Counsel are asked to file further written submissions on the points referred to above by Tuesday 5 August at 12 noon following which an addendum to this judgment will be issued quantifying the awards. If counsel can agree on the figures a joint memorandum may be filed.

Dated at Port Vila, this 1st day of August, 2008

BY THE COURT

C.N. TUOHY
Judge