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Barnes v Strickland Brothers Ltd [2004] WSSC 27 (28 April 2004)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

IN THE MATTER: SAISAMOA BARNES
of Vaitele-fou, Accountant
PLAINTIFF

AND:

STRICKLAND BROTHERS LTD
a duly incorporated company having its principal place of business at Pesega.
DEFENDANT

Counsel: Mr FPF Meredith for the plaintiff
Mr A. Roma for defendant

Date of Hearing: 9 and 10 April 2002
Date of Judgment: 28 April 2004

JUDGMENT OF VAAI J

The plaintiff in these proceedings is the former employee of the defendant. She commenced employment with the defendant in April 2001 as a debt collection officer at a salary of $10,000.00 per annum and after a three months probationary period, she was, on the 23^rd July granted an increase in salary as well as an incentive scheme benefit as expressed in the following letter from the Financial Controller of the defendant:

“July 23, 2001

PERSONAL AND CONFIDENTIAL

Ms Saisamoa Raidau Barnes,

Credit Controller

Strickland Bros Ltd.

Dear Ms Barnes

You have now completed successfully your three month probation period with this company and it has been decided that your gross salary as from August 1^st 2001 will be raised to $12,000 per annum ($230.77 per week).

As from July 1^st 2001 you will also benefit from a quarterly incentive scheme based on your debt recovery performance. At the end of each quarter starting from 1^st July 2001, you shall be entitled to a bonus payment of 2.5% of debt recovery less new credit sales during the same period which is the same as the net reduction of the total value of outstanding domestic debtors’ ledger.

Congratulations on the good start you made in this company and keep up the good work.

Sincerely yours

Maluiaiga Jerry Hope

Financial Controller”

Three months later the plaintiff received the following written memorandum from the same Financial Controller:

“INTERNAL MEMORANDUM

October 26, 2001

TO: Ms Saisamoa Barnes

cc: Mr Joe Strickland

From: Jerry Hope Mrs Imeleta Strickland

Subject: The Setting of Priorities in Debt Collection

At the close of business yesterday, our debtor collections so far this month came to $340,659 whereas new credit sales for the month came to $532,414. The size of our debtor portfolio therefore increased by $191,755, which is by far the largest increase in one month seen so far this year.

It goes without saying that both the shareholders of this company and our bankers will view so substantial an increase in our accounts receivable ledger in so short a period of time with great concern, if not alarm.

The main cause of the above state of affairs has been the record growth of credit sales. Whilst it would be unfair to suggest that you have slackened off in your debt collection efforts, the unfortunate fact remains that you have been unable to keep up with this month’s massive growth in credit sales.

There must now be close to 500 unpaid accounts constituting our trade debtors ledger. As mentioned to you earlier, it is important for this company’s debt collection resources, thin on the ground as they are, to be directed towards those sectors promising the largest returns.

Never more than now has the need been more urgent to set debt collection priorities and to follow up relentlessly the plan of action dictated by these priorities.

To help you in your task, I have compiled a list of the company’s ten largest unpaid accounts from our most up-dated computerized database. Where appropriate, background comments have been made on some of these.

Between them, the “top ten” owe more than $273,000 to the company, i.e. about 2% of our accounts receivable owe about 20% of the total ledger.

From now on please treat these “top ten” accounts as your most urgent priority. I would like to see from you a brief report every week summarizing the measures taken by you in pursuit of these accounts and in obtaining collections.

Faafetai.

(Sgd) J. Hope”

Understandably, the court sympathises with the plaintiff and appreciates her irritation by the tune and contents of the note. Her reply to the memorandum is set out in full.

“October 29, 2001

The Financial Controller

Re : Your Memorandum Setting of Priorities in Debt Collection

As the designated Debt Collection officer, I felt disappointed at the insinuation that the increase of your debtor portfolio is seemingly a result of my collection effort. It is technically an insult that whoever is responsible for allowing credit sales to soar and you point the finger at me. At any level in management, what is being done to screen the integrity of many of these credit customers? It is not my duty to ever try to ‘catch up’ with your lack of appreciation on what appears to credit sales going out of control. Even with my collection totalling $340,659 which you so gladly appreciate because it gives you a good spending balance, that is no excuse for any management officer of integrity to level blame at any officer of the company because that should be your job.

I don’t want to intrude into your duties as the “Financial Controller” but, since your duties include being a ‘posting clerk’, you should know better when the debtor portfolio increased, how it came to that result, and what is being done to control that increase so that we are not unnecessarily open to in-collectable debts and internally creating an avenue for unfaithfully customers to reap there from because our debtor accounting data does not necessarily support our financial aspirations and cash-flow requirements.

I consider as a professional insult your comment that .... “never more than now has the need been more urgent to set debt collection priorities and to follow up relentlessly the plan of action dictated by these priorities.” Although you may be my immediate supervisor, you have clearly exhibited your total unqualification and lack of scholarship for the line of work. I am doing I have you so quickly forgotten the panic situation we were in when you ran the company’s finances dry a few weeks ago and it was my collection effort that saved us from financial embarrassment?

There is nothing that I hate most than people who fail in their duties and they write accusing letters to cover their “backsides” from either the Directors or the Bankers.

I must, however, thank you for your help for this direction. I will not do any more collection as regards any other debts that are not on the list you gave me. The important list of the “top ten” you so generously worked out will be my only duty and I am glad to be paid to just do as you want as regards your “top ten”. Your preference to concentrate on the “top ten” which, in your opinion, comes to $273,000 I almost a total defeat of financial management and financial economy of scales but as you have “dictated” that $273,000 is better than $340,659, that is exactly what I will do! I never thought to experience a defeat of the theory of “Pareto Optimality’. But, you know better.

On your suggestion that I show you statements for all ten of your “top ten” listed accounts, I cannot understand your demands. You are doing the posting. You should be giving me the statements to base my collection efforts on. Did you not say that your concern is the result of your ‘most up-dated computerized data-base?’ You so clearly say “where appropriate, background comments have been made on some of these”. Does the English words – where appropriate – no longer mean what they used to mean, and to me, that means I should follow only what you consider appropriate, no more no less? What more can I add to your ‘most up-dated computerized data-base? Why should the company expend its valuable resources on any other paper when you have everything in your ‘most up-dated computerized data-base?

You have given notes to your “top ten” listed accounts but I did not intend to give you comments on all of them just now until I have received a copy of our “most up-dated computerized data-base” on the debtor portfolio. But I want clarification on the account of Dave Parker. You have asked if an agreement has been signed. In return, I would like to ask you the same question. In this not part of your duties? Are you not the Financial Controller who oversee these important transactions of the company?

As regards the amount of Tuluaauau Liaina, how do you think I should know the repayments made when these are made in New Zealand and the bank records come to you only for your reconciliation. If, as you say, the account is no longer in the “top ten”, why is it listed and makes the list messy? Still on this account, does not your ‘most up-dated computerized data-base’ give a real most up-dated view. What exactly do you mean then when you say ‘most up-dated computerized database?

I will endeavour to give you the required weekly briefs on actions taken and my pursuit of the “top ten” accounts as you have dictated by the priorities.

One final point, please note I am against your priorities as I consider them unproductive and unprofessional but if only through results of bad decision making will cause you to realize that our management is slowly falling to a extremely unfavourable low level, I am willing to walk any ‘thin line to prove to both you and the directors how retrogressive our financial management is becoming.

I do not aim to insult any body but just to set the record straight for posterity because I do not like “finger pointing people”, it tantamount to hypocrisy!

Faafetai

Saisamoa Barnes

DEBT COLLECTION OFFICER

cc: Ime Strickland

cc: Joe Strickland”

On the same day a meeting attended by the plaintiff, the financial controller, the Managing Director (Mr Strickland) of the defendant and Mrs Strickland was called. The plaintiff says the purpose of the meeting was to address the correspondences exchanged between the plaintiff and the financial controller, while the defendant says the meeting was summoned when several debtors’ files were discovered to have been deleted from the computer of the financial controller earlier that morning. However, as a result of the meeting the plaintiff was suspended; her suspension was confirmed by letter written the following day (the 30^th October) followed by a letter of termination the day after (the 31^st October. The letter of termination reads:

“October 31, 2001

Ms Saisamoa Barnes COPY

Vaiusu

Dear Ms Barnes

LETTER OF TERMINATION OF YOUR SERVICES

I refer to our meeting of October 29 2001 during which, for the reasons explained to you, we asked you to go on suspension to enable us to complete our investigations into the allegation of your deliberate attempt to delete certain file on Mr Hope’s computer.

Having now completed these investigations, I regret to advise you that the results of these investigations leave us with no other option but to send you this letter of termination together with a cheque in the account of $950.57 in respect of your final entitlements as laid out on the attached statement.

The incident of the deleted computer files was not the first instance of unacceptable behaviour and during the relatively brief period of your employment with this company, you have built up a history of several occasions where we have had to bring other cases of unacceptable behaviour to your attention.

In the letter of suspension we sent you yesterday, we gave you the specific instruction to refrain from visiting our customers. In view of your past, we must again specify that on no account should you contact our customers on our behalf from now on. We must also advise you that if we obtain any further evidence of your collecting company debts on our behalf without authorization, we will not fail to follow up the matter wit the appropriate law enforcement agencies.

Please acknowledge receipt of this letter together with the cheque and covering statement on the attached copy of this letter.

Yours sincerely,

Joe Strickland

Managing Director

I acknowledge receipt of the above letter

Together with PCB cheque No.157389 for

$950.57 in respect of my final entitlements.

Saisamoa Barnes Date:_____________

(Received letter writer protest

and I resigned herewith.

Expect legal action against you).

(Signed) - 1/11/01”

I shall now deal separately with each of the two grounds for termination as stated in the letter.

Deleted Computer File

The defendant says that on the morning of the 29^th October 2001 while the Financial Controller was away from his office the plaintiff deleted certain debtors’ files from the computer of the Financial Controller. Ilalio Tolovaa the accounts officer for the defendant told the court that on the morning of the 29^th October 2001 he was using the computer of the financial controller to post the sales for the day before (28/10/01) when the plaintiff came into the office and requested the use of the computer. He left the office while the plaintiff used the computer and on his return he completed the postings and when he checked the sales for the previous months he discovered that some of the debtors’ files were missing. Upon the return of the Financial Controller to the office that morning Ilalio told him of the missing files.

The financial controller confirmed that when he left the office for the bank that morning, Ilalio the accounts officer was using the computer to do some postings and upon his return he was told by Ilalio that some debtors’ files were missing. The financial controller confirmed after checking his computer that several debtors’ files including a final letter of warning to the plaintiff dated the 7^th September 2001 were all deleted. He was in fact working on one of the files that morning before he left for the bank and as the plaintiff has her own computer she had no reason to use the computer. A computer technician was engaged to retrieve the deleted files. Robert James Ross found the six files in the Recycle bin; they were deleted from the My Documents folder one at a time and he was of the view it was very unlikely that the files were deleted by mistake.

The plaintiff admits she did use the computer of the Financial Controller as her own computer was not functioning but she denied deleting any files. I have no reason to doubt the evidence of Ilalio Tolovaa the accounts officer and the financial controller that the files were deleted at the time the plaintiff was using the computer. My findings which will appear later in my judgement on other matters concerning the conduct of the plaintiff will reinforce my conclusion that the plaintiff did deliberately delete the debtors files.

Other Unacceptable Behaviour

The defendant alleges that prior to the deletion of the files by the plaintiff there were several occasions during the course of her employment with the defendant in which the plaintiff wilfully committed acts which violated the confidence and good faith between an employer and employee relationship. One such occasion was the collection by the plaintiff of monies from Uaina Liki, one of the defendant’s debtors and which necessitated the issue of the warning letter dated the 7^th September 2001 earlier referred to above.

During the course of her testimony the plaintiff was questioned by her counsel if any allegations of misappropriation of funds were levelled at her before her dismissal and she responded that during one of her collection trips she did collect $100 from Uaina Liki which she receipted but before she got to the office she met a relative who requested some money and the plaintiff gave the relative $100. On arrival at the office the plaintiff handed the office manager the monies and receipt book and told the manager about the $100 given to the relative and it will be paid and was repaid from the plaintiff’s salary.

Under cross-examination she admitted that the receipt she gave Uaina Liki was not from the defendant’s receipt book. In explanation she said that when she visited Uaina Liki she did not have the defendant’s receipt book but there was a spare receipt book which she used. It was also brought out under cross examination that the plaintiff on another occasion collected $100 payment from Uaina Liki and the receipt issued was not from the defendant’s receipt book.

The two payments by Uaina Liki were discovered by the defendant’s financial controller by accident. Uaina Liki and the financial controller knew each other and the financial controller noticed from the debtors list he sees everyday that Uaina Liki has not been making any payments and when they accidentally met at Uaina Liki’s store and upon being told by the financial controller of his outstanding debt Uaina Liki produced the two receipts issued by the plaintiff. Despite the seriousness of the misconduct the plaintiff was given another chance by the defendant’s management. It was probably regretted too late by management that the plaintiff was allowed to continue working because the plaintiff as the evidence brought out continued to issue receipts from her own receipt book for the payments she collected from the customers of the defendant.

When asked under cross examination whether she issued receipts similar to the ones she gave Uaina Liki to other debtors of the defendant she said no. But she conceded under further questioning and after being shown two receipts signed by her that she did collect on two occasions $100 and $150 for the debtor Reupena Matafeo. And as the two receipts were not from the defendant’s receipt book the payments were not deducted from the debtor’s outstanding account balance with the defendant.

The evidence leads me to only one conclusion. It shows that during the relatively short period the plaintiff was employed by the defendant she has resorted to conduct of deceit and dishonesty for her benefit and to the detriment of the defendant. It is grave and serious conduct which justified instant dismissal and warranted criminal prosecution; and the plaintiff had the audacity to seek through the legal process compensation for the consequences of her illegal and criminal activities. She deliberately deleted the computer files and attempted to place the blame on the children of the financial controller who were nowhere near the defendant’s premises that day. As she had her own computer which was functioning well that morning the only purpose she accessed the computer of the financial was to delete the files which she did.

In conclusion, I find that the plaintiff’s conduct as an employee of the defendant is of such a nature that it shows that the plaintiff has violated the confidential relationship with the defendant or has repudiated the contract of service so that instant dismissal was justified. As a consequence the plaintiff’s first cause of action must fail. See: Laws v London Chronicle (Indicator Newspaper) Ltd 2 All ER 285; Ida Pouono v The Corporation of the Presiding Bishop to the Church of Jesus Christ of Latter Day Saints: Unreported Decision Vaai J 25/10/02.

In any event the plaintiff was paid two weeks salary in lieu of notice, so that even if her dismissal was not justified, but given that she was employed for a period of about 6 months only a notice of two weeks would in my view in the circumstances considered reasonable. See Lui Lauano v Yazaki Eds Samoa unreported decision of Wilson J 9/8/2000 and Brandt v Nixdorf Computer Ltd (1991) 3 NZLR 750.

The plaintiff’s second cause of action relates to the publications made by the defendant and concerning the plaintiff in the Observer Newspaper of the 4^th and 6^th November 2001 which sates:

“PUBLIC NOTICE

Miss Saisamoa Barnes’ services with Strickland Brothers Ltd have been terminated effective 31^st October 2001.

Miss Barnes is no longer authorised to collect debt repayments on behalf of Strickland and Brothers; or represent the said company in any capacity whatsoever.

Please contact Strickland Brothers at telephone 22452 of 22833 if you have any questions relating to this notice.

Joe Strickland
Managing Director
Strickland Brothers Ltd.”

The plaintiff alleges that the publication gave a false but clear implication that the plaintiff was dismissed because of dishonesty or misappropriating the defendant’s customers debt repayments. I have already determined from the evidence the dishonesty of the plaintiff when she issued receipts to at least two customers of the defendant and which receipts were not from the defendant’s receipt books so that as a consequence the payments by the customers did not reduce their indebtedness to the defendant. So that if the publication as alleged by the plaintiff gave a clear implication that the plaintiff was dismissed because for dishonesty and misappropriation then the notice is not false. In any event there is evidence which I accept from Mr Thomsen a 63 year old accountant from American Samoa who had spoken to the plaintiff on the phone several times before her dismissal concerning the account of one Fanene a customer of the defendant and a client of Mr Thomsen. Through Mr Thomsen a remittance of $500.00 was sent from American Samoa to the defendant as part payment of Fanene’s debt. Mr Thomsen also told the court that the plaintiff rang at least three times urging Mr Thomsen that if he pay US$1,000 she will write off Fanene’s account. The last of the phone calls was made after the plaintiff was dismissed.

The publication was made in good faith to protect the customers of the defendant; it was not malicious. The plaintiff cannot claim to protect a reputation which she did not possess. As a consequence the plaintiff’s second cause of action must fail.

The plaintiff’s so called third cause of action is really a claim for damages based on the unlawful dismissal and the false and malicious publication which are the basis of the first and second cause of action. Needless to say that this so called cause of action must suffer the same fate as the first two causes of action.

Finally I shall now consider the plaintiff’s claim for bonus payment of 2.5 percent, as this claim is independent of the first two causes of action. The plaintiff says that she is entitled to bonus payment of $41,163.47 which is the 2.5% of the debts she did collect as stipulated in the letter of offer dated the 23^rd July 2001 referred to earlier. For clarity the reference in the letter to the bonus payment of 2.5% states:

“At the end of each quarter starting from the 1^st July 2001, you shall be entitled to a bonus payment of 2.5% of debt recovery less new credit sales during the same period which is the same as the net reduction of the total value of outstanding domestic “debtors’ ledger.””

The plaintiff has produced as exhibits summary of her debt collection since she was employed in April 2001 and she claims that 2.5% of her total collection amounts to $41,163.47 to which she is duly entitled to. However in the first place the 2.5% bonus scheme according to the letter of offer was to commence from the 1^st July 2001 and secondly it is clearly not 2.5% of all the debts collected; it is 2.5% of debt recovery less new credit sales during the same period; or 2.5% of the net reduction to debtors ledger. So that the correct calculation of the 2.5% bonus is as follows according to the balance sheet as at the 30^th September 2001.

Trade debtors as at 30/06/01 = $1,267,049.62

Trade debtors as at 30/09/01 = $1,248,199.42

Net Reduction debtors ledger = $ 18,859.20

Commission of 2.5% = $ 471.26

The plaintiff conceded that $500 was advanced to her upon her request as part payment of the bonus payment so that the claim for bonus payment cannot be maintained. The claim for bonus payment must also fail. Judgment is given for the defendant who is also entitled to costs. I fix costs at $2,500.

JUSTICE VAAI