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Tafua v Samoa Rugby Union Incorporated [2019] WSSC 90 (8 August 2019)

THE SUPREME COURT OF SAMOA
TAFUA and SAMOA RUGBY UNION INCORPORATED [2019] WSSC 90

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

BETWEEN

TAFUA of Vaiala
Plaintiff

A N D

SAMOA RUGBY UNION INCORPORATED a duly incorporated society having its registered office at Tuanaimato
Defendant

Counsel:
S Perese for Plaintiff
S Leung Wai for the Defendant

Written Decision: 8 August 2019

RESERVED DECISION OF TUALA-WARREN J

INTRODUCTION:

1. The Plaintiff was employed as Head Coach (‘HC’) of the Manu Samoa 15s team between September 2017 and September 2018.
2. The Plaintiff and the Defendant signed a contract of employment (‘the Contract’) in May 2018. This contract was intended to end in November 2019.
3. On or about 25 August 2018, the Plaintiff was verbally advised by Faleomavaega Vincent Fepuleai, the Chief Executive Officer of the Defendant (‘CEO’) that his contract was terminated. On 24 September 2018, a written notice of the termination signed by the CEO was received by the Plaintiff.
4. The Plaintiff gave evidence, and for the Defendant, the CEO and Chief Financial Officer of SRU, Iona Tielu gave evidence.

THE PLAINTIFF’S CLAIM:

5. The Plaintiff pleads two alleged causes of action, in summary:

Cause of Action: Breach of Contract by Defendant;

(i) The agreement is a contract for a specified period and pursuant to the Labour and Employment Relations Act 2013 (‘LERA’) is terminated when the period of time for which the contract was made has expired, or earlier upon the grounds for misconduct and abuse as defined in section 57 of the LERA;
(ii) The provisions contained in the LERA are implied terms of the agreement;
(iii) The Defendant’s termination of the Plaintiff’s contract breached the terms of the agreement because the period of time of the contract had not yet expired, and termination was not based on grounds set out in section 57 of the LERA.

Alternative and Second Cause of Action:

(i) It was an implied term of the agreement that the parties would act in good faith towards each other, consistent with an employment relationship based on trust and confidence;

(ii) The duty of good faith imposed on the Defendant a number of fiduciary obligations including the obligation to inform the Plaintiff of any concerns that could result in termination, held by the Defendant about the Plaintiff’s performance of his role as the Manu Samoa 15s head Coach;

(iii) The Defendant did not inform the Plaintiff of any concerns about his performance of the terms of the agreement, or any concerns under section 57 of the LERA;

(iv) If the Defendant purports, post termination, to rely on any breaches of the agreement as the substantive justification for termination, then such reliance is a breach of the Defendant’s fiduciary obligation of trust and confidence owed to the Plaintiff.

6. The Plaintiff prays for $145,000.00 by way of breach of contract, general damages, costs and such further relief as the Court deems fair and just.

THE DEFENDANT’S DEFENCE

7. The Defendant says;
   • (i) that LERA does not apply to the Defendant and the agreement because it only applies to public bodies as defined under the Public Bodies (Performance and Accountability) Act 2001 and all private or nongovernmental business entities of which the Defendant is neither because it is an incorporated society;

(ii) Pursuant to the termination clause of the agreement, the Defendant terminated the employment of the Plaintiff with effect 27 August 2018 and paid out all the entitlements and benefits under the agreement to the Plaintiff;
(iii) It is an express term of the agreement that either party may terminate the employment giving 2 months’ notice in writing or in the case of termination by the Defendant payment in lieu, except in the case of dismissal for serious conduct that justifies instant dismissal;
(iv) The Defendant terminated the employment of the Plaintiff by the payment of 2 months’ pay in lieu of notice and all entitlements to the Plaintiff;

• (v) The entire agreement variation clause in the agreement states that the agreement constitutes the entire agreement and the express terms of the agreement govern the agreement and therefore terms cannot be implied as alleged;
• (vi) The Plaintiff accepted the benefits and entitlements.

8. The Defendant prays for dismissal of the claim, costs and other relief as the Court deems just.

THE LAW:

Labour and Employment Relations Act 2013(LERA):

9. LERA applies to public bodies as defined under the Public Bodies (Performance and Accountability) Act 2001 and all private or non-governmental business entities. Civil proceedings can be brought where an employer or employee seeks remedies for an alleged breach or non-performance of a contract of service (s. 77 LERA).
10. The Plaintiff was employed on a fixed term contract. Section 53 of the LERA relevantly provides:

“53. Termination of a contract of service for a specific period or task –

(1) Subject to subsection (2), a contract of service for a specific work or for a specific period of time is terminated:

(a) when the work specified in the contract is completed; or
(b) when the period of time for which the contract was made has expired.

(2) Despite subsection (1), a contract of service for a specific work or for a specific period of time may be terminated under section 57.” (emphasis added)

11. Section 57 then provides:

“57. Misconduct and abuse - (1) An employer may terminate the services of an employee without notice nor payment instead of notice where the employee:

(a) willfully breaches his or her terms and conditions of employment; or
(b) willfully disobeys a lawful instruction given by the employer or the managerial personnel within the place of employment; or

...”12. Section 33 LERA provides that a term of the contract which contravenes LERA is unlawful and has no effect.

The Employment Contract:

13. The Plaintiff was appointed Manu Samoa 15s Head Coach pursuant to a contract of employment commencing not later than 15 September 2017 (“commencement date”) for a term concluding on 30 November 2019. The Plaintiff reported to the General Manager of High Performance. The total remuneration package was SAT$125,000 per annum. Performance review dates were also provided, one taking place on 15 December 2017 after the conclusion of the three-month probation period and then one every 6 months.
14. The termination clause provides; Subject to the successful completion of the probationary period, either party may terminate employment by giving one month notice in writing, or in the case of termination by Samoa Rugby Union Inc, payment in lieu, except in the case of dismissal for serious misconduct that justifies instant dismissal.

Serious misconduct includes but is not limited to;

(a) wilful or deliberate behavior by you that is inconsistent with the continuation of this employment agreement;
(b) conduct that causes eminent and serious risk to;

• (i) the health or safety of a person; or
• (ii) the reputation, viability or profitability of Samoa Rugby Union’s business;

(c) The employee in the course of your employment, engaging in;

• (i) theft;
• (ii) fraud;
• (iii) assault;
• (iv) harassment;

(d) the employee being intoxicated at work;
(e) the employee refusing to carry out a lawful and reasonable instruction that is consistent with your contract of employment.

15. The Agreement does not have clause numbers but page 8 contains an Entire Agreement Variation which provides; This Agreement constitutes the entire Agreement of the parties in respect of matters dealt with in this agreement and supersedes all prior agreements, understandings and negotiations in respect of the matters deal with in this agreement. This agreement cannot be varied except by written agreement between of the parties.

ISSUES:

16. The first issue in this case is whether the LERA applies to the contract for service between the Plaintiff and the Defendant.
17. The second issue is whether there is an implied term of the contract that the parties would act in good faith towards each other, encompassing a duty of good faith, and an obligation on the Defendant to inform the Plaintiff of any concerns about his performance that could result in termination.

EVIDENCE:

18. Fuimaono Titimaea Tafua (‘Mr Tafua’) has devoted 30 plus years of his life to rugby, initially as a player in the Manu Samoa team, then as a coach of various national rugby teams, the sevens in 2016-2017 and the 15s in 2017 until 2018 when he was terminated as the coach of the Manu Samoa 15s. He continues his voluntary work with Apia Rugby Province.
19. He was the Head coach of the Manu Samoa 15s team when they qualified for the Rugby World Cup to be held this year in September.
20. Mr Tafua gave evidence that on being terminated, he was hurt, ashamed and it had a huge impact on his reputation. He says he served rugby for more than 30 years. He says the Manu Samoa 15s team did not qualify for the 2015 Rugby World Cup but they have now qualified for the 2019 Rugby World Cup.
21. Mr Tafua says he has no formal qualifications but has some knowledge of accounting.
22. In relation to the termination, Mr Tafua says that the general manager of the High Performance Unit, Zane Hilton called him and informed him about a letter being prepared and sent to him on Monday after he had met with the Chairman and CEO on the Sunday. He then went to the CEO to ask about the phone call because it conflicted with what the Chair and CEO had told him, that his position would be re-advertised and for him to reapply. He says the CEO said to do as the Chair and Board had advised.
23. When asked about this letter, Mr Fepuleai says in his evidence that he prepared a letter of termination in August 2018 but Mr Tafua never came to pick it up until 24 September 2018 and that in the interim Mr Tafua applied for the coaching position. Mr Tafua says he found out he was not selected as head coach through media reports.
24. In relation to the SRU’s relationship with World Rugby, Mr Fepuleai gave evidence that this relationship deteriorated when Mr Tafua was picked as Head Coach of Manu Samoa 15s in 2017 as he was the 6^th ranked candidate and World Rugby was unhappy that SRU had breached an agreement between World Rugby Trust and SRU. The agreement was that SRU would afford World Rugby or its nominee the opportunity to be involved in the recruitment and selection for all appointments of personnel for whom World Rugby investment will be wholly or partly required pursuant to the approved High Performance budget. The Head Coach Mens 15s is included in this personnel (see clause 3.3(b)) and the appointment will be subject to World Rugby approval in each case (see clause 3.3(a) of High Performance Tier 2 (HPT2) Union Investment Agreement). There is a letter from Peter Horne, the World Rugby General Manager High Performance dated 30 August 2017 to Mr Fepuleai stating the World Rugby will need to approve the final candidate and their associated remuneration package prior to any offer being made.
25. Mark Egan in a letter dated 25 September 2017 wrote to Mr Fepuleai stating that the appointed Head coach (Mr Tafua) does not meet the World Rugby Minimum standards and SRU is in breach of the World Rugby 2016-17 HPT2 Union Investment Agreement dated 28 July 2016, namely clause 3.3(a) Programme Staffing-key Roles, which states that SRU is required to seek World Rugby approval before an appointment of a key role such as the Head Coach is made.
26. On 30 September 2017, the Chair of the SRU, Mr Malielegaoi wrote to Mark Egan apologizing for the manner in which SRU matters have been perceived by World Rugby and that the absence of seeking approval from World Rugby was an oversight on the part of SRU. He says that Mr Tafua, was the most experienced of the shortlisted candidates having held a national head coach position before, having achieved Tier 1 match success and having led a Rugby World Cup campaign, which in the Board’s view, evidently exceeded World Rugby’s minimum standard.
27. After the Northern Hemisphere Tour at the end of 2017, Mr Fepuleai says World Rugby refused to pay Mr Tafua’s salary. Mr Fepuleai says that a review was done by World Rugby after the Northern Hemisphere Tour around January 2018 which he says was a good review. This review is not included in the Defendant’s bundle of documents.
28. The 2018-2019 Annual Review which took place on 2-3 August 2018 is included. In that review, the Rugby World Cup 19 Campaign in relation to Coaching stated : The General Manager HPU Zane Hilton is overextending combining his current GM role with coaching support for the Head Coach Titimaea Tafua, which is detrimentally effecting HP programme operations. Further the need for Zane to provide coaching support has come about due to the deficiencies in the elite coaching ability of the current Head Coach. This situation is not sustainable and needs to be addressed by the union as a matter of priority. The rating for coaching was ‘Below Expectations’.
29. After that review, of which there is no evidence before the Court that it had been discussed with Mr Tafua, Peter Horne of World Rugby wrote to Mr Fepuleai on 23 August 2018 saying that World Rugby agrees with SRU Board that, inter alia, a suitable replacement is sought urgently for the Head Coach.
30. The only Board minutes included in the documents are those of the SRU Special Board meeting held on 25 August 2018. In those minutes, the Secretary of the Board, Namulauulu Sami Leota said; As I look closely at the WR paper, it says here that it was our Board that put forward this recommendation.1. Put Zane back to HPU duties. 2. Re advertise the HC position. As a Board Secretary we did not make this decision. He also says: We have also never seen the report of the review to point out what the HC is lacked of and maybe for us to address those weaknesses rather than us doing a whole reverse of our previous decision.
    31. The Treasurer Vui Lance Lameko also alluded to the issue of replacing the HC: I am a bit surprised with this issue as I never thought it will be advertised again. It appears that there was a review. I ask if this review had been deliberated in the HPU committee or this Board as this is new.
    32. The resolution which came out of that special board meeting was to re-advertise the HC position as soon as possible and also encourage the current HC to apply. It was left to the Chairman to meet with the current HC and advise him of the Board’s decision.
    33. On 17 September 2018 the interview process took place. Mr Tafua and Mr Jackson were the remaining two candidates. The panel concluded that Mr Jackson would be engaged as HC for Manu Samoa until the end of the RWC 2019.
    34. In a letter dated 24 September 2018, Mr Fepuleai wrote to Mr Tafua that the Board of SRU in a special meeting on 25 August 2018 terminated his employment effective 27 August 2018. He says the one month’s notice was from 27 August 2018 to 26 September 2018. He says in his letter: You were informed by your immediate supervisor (General Manager HPU) re the matter.
    35. On 28 September 2018, Mr Tafua wrote to Mr Fepuleai raising a formal grievance in relation to his termination, in that, it was done without valid grounds and without affording him an opportunity to be heard. He sought to resolve his grievance through mediation and he asked for full payment of his salary until 30 November 2019 which is his contract official end date, and a public apology from SRU for termination without valid grounds which led to embarrassment for him, his family, his village, his rugby club and also tarnished his reputation as a rugby administrator.
    36. On 16 October 2018 Mr Fepuleai replied to Mr Tafua citing the termination clause and saying: the Board’s decision to re-advertise your position as Head Coach of Manu Samoa 15s was from noted concerns on World Rugby’s recent 2018-19 HP Annual Review held on 02-03 August 2018. In that process, RWC 2019 campaign and HP Programme was addressed which you as HC and other HP staff were reviewed. Following the review, World Rugby alerted the CEO in a letter of critical importance on the Manu 15s programme which the Board was urgently informed.
    37. On 27 November 2018, one months’ notice (27 August 2018-27 September 2018) together with allowance owing and sick leave was paid out to Mr Tafua. The total was SAT$10,145.00.
    38. Iona Tielu gave evidence of the World Rugby Funding of SRU operations. In 2017, World Rugby penalized SRU for SAT $142, 000.00 due to Head Coach selection breach. World Rugby withheld a further £100k in 2017 and agreed to pay £80k in early 2018 and £20k at the end of the year if key performance indicators were met. On average World Rugby provides 45% of SRU’s annual income.

DISCUSSION:

39. It is not in dispute between the parties that the Plaintiff and the Defendant entered into a contract for service and it is an employment contract according to its terms.
40. It is also not in dispute that the Defendant verbally terminated the contract on or about 25 August 2018 and did so in writing in a letter dated 24 September 2018. The question then is whether the Plaintiff has established on balance of probabilities that the LERA applies to the contract and if so, the Defendant did not terminate the Plaintiff’s employment with the Defendant according to LERA, despite the termination clause in the contract.
41. Pursuant to section 3(4)(b) of LERA, it is an Act which applies to private and non-government business entities. The Defendant is an incorporated body, registered under the Incorporated Societies Ordinance 1952 (ISO).
42. Section 9 of ISO provides;

9. Upon issue of certificate members to be a body corporate – Upon the issue of the certificate of incorporation the subscribers to the rules of the society, together with all other persons who are then members of the society or who afterwards become members of the society in accordance with its rules, shall as from the date of incorporation mentioned in the certificate, be a body corporate by the name contained in the rules having perpetual succession and a common seal, and capable forthwith, subject to this Ordinance and to the rules, of exercising all the functions of a body corporate and of holding land.

43. Therefore for all intents and purposes, the SRU is a non-government body corporate. The LERA applies to the SRU.
44. Section 52 of the LERA then provides that (1) A contract of service may be terminated in accordance with the provisions of the Part. [my emphasis]
45. The use of the word ‘may’ is discretionary. Section 8 of the Acts Interpretation Act 2015 provides; Interpretation of “shall” and “may” - The expression “shall” or “must” is to be construed as imperative and the expression “may” as permissive.
46. Because the LERA applies to SRU, if the SRU chooses to terminate its contracts of service according to LERA then the provisions of Part 8 dealing with Termination of Contract of Service apply. However, in this case, they have included a termination clause in their contract of service with the Plaintiff which gives each party the option to terminate by giving one month notice in writing, and in the case of termination by SRU, payment in lieu except in the case of dismissal for serious misconduct.
47. Mr Fepuleai gave evidence that the Plaintiff was not terminated for serious misconduct.
48. The Plaintiff argues that LERA was intended by Parliament to be significant. There is no doubt that this was Parliament’s intention given the Part 4 prohibitions against forced labour, sex discrimination, declarations of fundamental rights and principles of employees, the right to bargain collectively and the freedom of association. Employers are not able to contract out of the provisions of Part 4.
49. The Plaintiff argues that the termination clause of the contract he signed is unlawful and has no effect because it contravenes LERA. He argues that it contravenes LERA because it is a contract of service for a specified time and only terminated when the work specified in the contract is completed or when the time for which the contract was made has expired. The latter is said to be specifically in this case, November 2019.
50. Part 8 of LERA in relation to ‘Termination of Contract of Service’ is a catch all Part in the event that a contract has not specifically dealt with termination or if contracting parties wish for those provisions to apply. Parties can then use Part 8, provided that an employer must not terminate the services of an employee during a period where the employee; is absent from work on account of his or her being sick, or is on paternity or maternity leave (s52(2) LERA).
51. The parties in this case have included a termination clause in the contract for service which is duly signed. Therefore, SRU does not need to give a reason for termination provided SRU pays in accordance with the termination clause, i.e. one months’ payment in lieu.
52. It is not disputed that Mr Tafua was paid one months’ notice on 27 November 2018. This in effect completes the obligations of SRU in relation to termination of the contract with Mr Tafua, subject of course to whether there is an implied term of the contract that the parties would act in good faith towards each other, encompassing a duty of good faith, and an obligation on the Defendant to inform the Plaintiff of any concerns about his performance that could result in termination.
53. It appears as if there was an unfavourable World Rugby review of Mr Tafua in or around August 2018. Pursuant to his contract, Mr Tafua is subject to reviews of his performance every 6 months, after an initial probation period of 3 months.
54. There was not a great deal of evidence given on the performance reviews of Mr Tafua. According to Mr Fepuleai the relevant and applicable KPIs in Mr Tafua’s contract are those for the year 2018. These are Manu Samoa Team Key Result Areas and KPIs which Mr Fepuleai says are interpreted as Head Coach’s KRAs and KPIs. The KPIs are listed as; Improve world ranking from 2016, Reduce any losing margins to Tier 1 nations from 2016, win Pacific Nations Cup and qualify for Rugby World Cup 2019, and win 1 x game Pacific Nations Cup. Mr Fepuleai agreed that the most important KPI was to qualify for Rugby World Cup 2019 which happened while Mr Tafua was Head Coach.
55. There is no doubt that SRU was feeling the pressure from World Rugby about the Head Coach. There is no doubt that SRU depends largely on World Rugby for the majority of their funding. There is no doubt that the World Rugby Review which was unfavourable to Mr Tafua was the impetus for re-advertising the Head Coach position.
56. It seems that the dissatisfaction of World Rugby stemmed from when Mr Tafua was first appointed as Head Coach. World Rugby expressed concerns with the process of appointment which resulted in them withholding a certain amount of funding from SRU.
57. However, despite the different reasons which arose from the evidence for the termination by SRU of the contract, it remains that SRU can do so without cause, i.e without having a reason. Unless of course there is an implied term of the contract that the parties would act in good faith towards each other, encompassing a duty of good faith, and an obligation on the Defendant to inform the Plaintiff of any concerns about his performance that could result in termination.
58. In relation to implied terms, in Brighouse v National Bank of Samoa Ltd [2004] WSSC 1, it was said;

In principle a term cannot be implied in an employment contract if it is contrary to or inconsistent with an express term. To do so will be paramount to rewriting the contract for the parties. A term [to be implied] which is in conflict with or undermines a right, obligation, or privilege expressed in a contract will be inconsistent with an express term.

59. A case which is similar to the present case in that it dealt with a written employment contract is Air New Zealand v Raddock [1999] 1 NZLR 641, which was also mentioned in the Brighouse case. The Court of Appeal was in unanimous agreement that a term cannot be implied into an employment contract if it is inconsistent with an express term. Henry J stated;

What is relied upon here is an implied term that the employee will not be dismissed unjustifiably. It is fundamental that an implied term cannot contradict or be inconsistent with an express term. In this case cl. 11(a) expresses the company’s (and Mr Raddock’s) right to terminate on one week’s notice. The employment is declared to be a weekly one, i.e., it enures from week to week unless terminated either summarily for misconduct, or by notice. To engraft onto the claim a further restriction on termination, namely it must be justifiable or for good reason, is patently inconsistent. The right is to give notice without cause. The first breach is said to be that the cause for giving notice, namely a desire to be rid of an embarrassingly critical employee, was insufficient or unjust. It is tantamount to saying that good cause is a prerequisite to the exercise of the right. That cannot be right.

60. Henry J said further;

The company’s case does not turn on a rejection of the proposition that the relationship of confidence and trust is to be implied as a normal incident of an employment contract. Nor does it turn on the proposition that procedural unfairness can never found a common law claim for damages where there has been a dismissal on notice which complies with a contractual right. In the latter situation we are content to leave open the possibility of a claim, for example where the right has been exercised in an unacceptable and damaging way, such as in a public and humiliating announcement of a notice of termination, designed to cause distress to the employee.

61. It seems therefore that an implied term that the Defendant has an obligation to inform the Plaintiff of any concerns about his performance that would result in termination, is in conflict with the express term of the contract which says either party can terminate by giving 1 months’ notice and in the case of SRU can terminate by payment in lieu.
62. I find therefore that the implied term as submitted by Mr Tafua, cannot be implied into the contract which he signed with the SRU. The termination which occurred is therefore lawful as it was in accordance with the contract.
63. Despite the fact that I find that Mr Tafua’s claims cannot succeed for the reasons above, I find portant to make a fe a few observations that may seek to avoid the obvious shame felt by Mr Tafua and to avoid these matters being played out in the public domain.
64. It is clear to me that SRU could have dealt with its obvious contractual powers to terminate more appropriately given the context. That context being that despite there being a clear contract in place, there are FaaSamoa obligations and principles of basic respect that ought to be adhered to when dealing with p who have contributed significantly to Samoa. There were was noute that that Mr Tafua was such a person. It seems to me based e evie evidence, that these basic principles had been lost and given no or little consideration.

65. I am theredisaped in the way thay that this matter was handled by the SRU and whilst I have no ability to y to direct anything in the context of the claims before me, I encourage Samoa Rugby to consider how it might in some way address this issue with Mr Tafua and/or put in place processes to manage these issues better in the future.

66. I also note the role that World Rugby played in the case and simply note that it too may wish to reflect on the perception that its direct and indirect pressure placed on the SRU ot have been appropriate in the circumstances.

RESULT:

67. For the foregoing reasons, the Plaintiff’s claim is dismissed.
68. The Defendant to file and serve Memorandum of Costs within 14 days. The Plaintiff to file his response within a further 14 days.

JUSTICE TAFAOIMALO LEILANI TUALA-WARREN

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