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Court of Appeal of Fiji |
IN THE COURT OF APPEAL
APPELLATE JURISDICTION
CIVIL APPEAL NO. ABU 0001 of 2010
(High Court Civil Action No. HBC 443 of2005 )
BETWEEN:
SUVA CITY COUNCIL
Appellant
AND:
SEMITI KOROI
Respondent
Coram : Chandra JA
Lecamwasam JA
Mutunayagam JA
Counsel : Mr. N Lajendra for the Appellant
Respondent absent and unrepresented
Date of Hearing : 11 September 2013
Date of Judgment : 3 October 2013
JUDGMENT
Chandra JA
[1] This is an appeal from the judgment of the High Court at Suva.
[2] The Respondent had been appointed as Director Administration and Operations by appointment letter dated 6 May 2004 on contract for a period of 3 years with an annual salary of $45,000, performance bonus of 10% of base salary per annum, housing allowance of $300 per month and limited use of a fully serviced and maintained Council Vehicle. He was to be placed on a probationary period of six months. He was to confirm his acceptance or otherwise not later than 17 May 2004. The contract document and job description was annexed to the said letter and if the offer was acceptable he was to confirm by signing the duplicate copy of the letter as well as the contract document and return both by 17 May 2004.
[3] The Respondent signed the acceptance returned the document on or about 17 May 2004.
[4] Subsequently a document known as Individual Work Contract for the position of Director Administration and Operations was signed by the parties.
[5] The Appellant Council by letter dated 1 April 2005 informed the Respondent that his services were no longer required. The said letter was captioned "Non Confirmation of Appointment and Termination of Services" and stated as follows:
"Council had resolved at its Ordinary Meeting of 31 March 2005 not to confirm your appointment as Director Administration and Operations due to non performance while you were under probation.
In this regard your services to Council had ceased effectively as at 31 March 2005.
...."
[6] The Respondent filed a writ of summons and in his statement of claim stated that he was surprised that his employment was terminated by the Appellant after loyally serving the Appellant and that the letter of termination came after working for over ten months which was beyond the six months probationary period. That the Appellant had acted in breach of the contract and had failed to follow proper procedures and failed to pay attention to section 12.6 of the contract by not paying him the unexpired portion of the contract. He claimed general, special and exemplary damages, Solicitor's costs on an indemnity basis, costs and interest.
[7] The Appellants in their statement of defence stated that the Management was to have tabled a report after the 6 month probationary period to determine whether or not the Council shall confirm the respondent to the position after satisfactory performance. That a report was tabled to the Council on March 2005 wherein the Council decided not to confirm the Respondent to the position based on non performance on the position. That the Respondent had also enquired with the Town Clerk on the confirmation of his employment to Council and the Town Clerk had informed the Respondent that it would be tabled at a later date to which the Respondent did not object to. That clause 12.6 of the contract was not applicable as the Respondent had not been confirmed. That the termination of the Respondent's employment was in accordance with his employment contract.
[8] The Respondent in his reply to the defence statement stated that the report that was tabled to the Council in March 2005 did not state that the Respondent was not performing and it was offering options giving the Town Clerk/CEO time to confirm the appointment. That he had been questioning the Town Clerk/CEO on the issue of confirmation of appointment since the end of the six months probationary period but was told by the Town Clerk/CEO that the political climate in Council was not yet right to table the confirmation.
[9] At the trial, the Respondent gave evidence and stated that there was no variation extending the probationary period. Under cross examination he stated that he could not find employment until August 2009 as the stigma of his termination made it difficult for him to find employment. He also stated that whenever he asked about his confirmation he was told by the Town Clerk that the timing was not right because certain councilors were not happy and that there was a possibility that it may have been rejected but that he did not understand that to be what the Town Clerk meant when he said timing not right.
[10] For the Appellant the Town Clerk gave evidence and stated that the Respondent was not confirmed within the 6 months as the performance was not satisfactory. That when the Respondent had asked him about his confirmation he said about the timing and that some were not happy with his performance. Under cross examination he said that summary of the discussion was in his report. The Report was not produced. He said that it was an oversight not to put the issues and complaint in writing.
[11] The learned High Court Judge by his judgment dated 11December 2009 awarded the Respondent damages in the sum of $102,550.64 with interest at 5% made up of $72,697.03 as net loss of wages $9783.91 for loss of employer's contribution to FNPF, $7269.70 for loss of 10% merit increase, $7500 for loss of housing allowance and $5000 as damages and costs on a party-party basis to be agreed and if there was no agreement to be taxed.
[12] By notice of Appeal dated 21st of January 2010 the Appellant appealed against the said judgment and set down the following grounds of appeal:
Consideration of the Grounds of Appeal
Grounds 1 to 4
[13] Grounds 1 to 4 cited above relate to the position of an employee who has been placed on probation and who has not been confirmed at the end of the probationary period but continues to be employed and is terminated subsequently on the basis of being a probationer as has occurred in the present case. Therefore it would be appropriate to deal with these four grounds together as they all relate to the effect of non confirmation of a probationer at the end of the fixed period of probation. The relevant Clause in the contract is Clause 5.1 which states as follows:
"5.1. The term of this contract shall be for a period of 3 years commencing on 17 May 2004 subject to a probationary period of six months, the substantive appointment shall be confirmed after satisfactory performance."
[14] It is not in dispute that the Respondent continued in employment after the 6 months' probationary period and had served for over 10 months when his services were terminated. The Supreme Court of Sri Lanka in State Distilleries Corporation v Rupasinghe (1994) 2 SLR 395 dealt with a similar situation and held that the termination of services of an employee who had been subjected to a probationary period after the expiry of such period on the basis that he was still a probationer was not justifiable. Justice Mark Fernando discussed the position of a probationer and the effect of a probationary clause and its implications regarding non confirmation at length and it would appropriate to quote extracts from the said judgment which would be relevant in determining the issues raised by the Appellants.
[15] Dealing with the meaning attributable to the term "probation" Justice Fernando stated:
"Probation, as the word implies, is a period during which an employee is "tried" or "tested" and given the opportunity of "proving" himself in relation to his employment. ......." The period of probation is a period of trial during which the probationer's capacity, conduct or character is tested before he is admitted to regular employment. For the purpose of confirmation, the probationer must perform his services to the satisfaction of his employer. ....
.....Probation is a fixed and limited period of time for which an organization employs a new employee in order to assess his aptitudes, abilities and characteristics, and the amount of interest he shows on his job, so as to enable employer and employee alike to make a final decision on whether he is suitable and whether there is any mutual interest in his permanent employment".
"There can be no proper "trial" of a probationer unless the employer has given him (except in regard to obvious matters) adequate information and instructions, both as to what is expected of him, and as to his shortcomings and how to overcome them. It would hardly be just and equitable for an employer to say that an employee has not proved himself by relying on his failure to fulfill undisclosed expectations, or to remedy uncommunicated deficiencies."
"At the end of the probationary period if the employer is bona fide not satisfied with the work and conduct of the probationer (or perhaps even if he entertains a genuine doubt or suspicion), he can dismiss the probationer, or extend the probationary period; if the employer is in fact satisfied with the work and conduct of the probationer (or if his opinion to the contrary is vitiated by mala fides in the wide sense), he cannot dismiss the probationer."
"There is no inflexible rule providing for the automatic renewal of probation and that an inference of renewal can only be drawn in those cases in which the circumstances justify it."
"If the contractual terms are ambiguous, or admit of more than one interpretation, both equity and the principles of interpretation concur in requiring that they be interpreted 'contra proferentem', against the employer and in favour of the employee."
[16] It was the contention of the Appellant that according to clause 5.1. (cited above), that substantive appointment was subject to satisfactory performance and that though clause 5.1 had stipulated a probationary period of six months, the substantive appointment was not automatic upon expiry of six months.
[17] An examination of the said clause would show that the terms "substantive appointment shall be confirmed after satisfactory performance" is stated after the terms "The term of this contract shall be for a period of 3 year period commencing on 17 May 2004 subject to a probationary period of six months". Does such a formulation of this term indicate two considerations, namely "a six months probationary period" and then "satisfactory performance"? If that were to be so, what is the meaning that is to be attributed to the terms "probationary period"? Such an interpretation would render the use of the terms "probationary period" meaningless and as indicating only a time period of 6 months. The word "probation" as seen from the explanation given to it and as observed in State Distilleries Corporation v Rupasinghe (supra) means satisfactory performance. The requirement of satisfactory performance is in built in the word "probation" in terms of employment. When a term is used in a contract, a meaning should be attributed to it and that is exactly what has been done in this clause and the use of the words "after satisfactory performance" are synonymous with the meaning attributed to the term "probation".
[18] The learned trial Judge in this case in interpreting Clause 5.1, stated that as regards satisfactory performance was concerned, it was performance during the six months period that was contemplated. That there had been no review of the Respondent's performance during that period or at the conclusion of the six months period. This interpretation accords with the interpretation given to the term 'probation' in the said contract and is in line with the interpretation given to that term in State Distilleries Corporation v Rupasinghe (supra).
[19] The learned trial Judge also considered whether there was a variation of the terms and arrived at the conclusion that there was no evidence regarding a variation of the terms of the contract. If there was to be such variation it had to be in writing and that it was not open to the Appellant to unilaterally extend the probationary period. His conclusion that the Respondent was engaged under the contract in a substantive full time position for three years, subject only to satisfactory performance in the initial six months probationary period is the conclusion that could be arrived at in this case.
[20] The learned trial Judge also concluded that by continuing to employ the Respondent after the probationary period on the same terms and conditions, the Appellant by its conduct has impliedly confirmed the Respondent in the substantive appointment for the balance of the three year contract. Considering the conditions in the contract and the evidence at the trial this conclusion of the trial judge cannot be faulted.
[21] It was also argued on behalf of the Appellant that the Respondent had admitted that he considered himself as a probationer even after the six months period as he had asked the Town Clerk about his confirmation and that he had stated in his cross examination that:
"whenever I asked about my confirmation ... the timing was not right because certain councilors were not happy".
That this answer in cross examination showed that the Respondent was aware that his substantive appointment was not confirmed and therefore it confirmed the position that he was aware that his substantive appointment had not been confirmed.
[22] That argument was on the basis of the answer given in cross examination by the Respondent as cited in paragraph 21. However an examination of the trial proceedings show that, it was only part of the answer that he had given. The Respondent had when asked whether "Not the right time indicated - it may have been rejected?" his answer had been "That was a possibility" and he continued to state:
"But I did not understand that to be what the Town Clerk meant when he said timing not right."
[23] Counsel did not refer to the continuation of the cross examination as cited above, which gives a different meaning to the Respondent's awareness of his position. It brings about a doubtful position in him as regards his status not an awareness of his unconfirmed status as submitted by the Appellant. It can also mean he deemed himself to be confirmed as the six months had lapsed and wanted formal approval of same. Therefore the argument that the Respondent was aware of his position as interpreted by the Appellant does not stand to reason.
[24] Counsel also argued that the said Clause 5.1 was ambiguous and that it has to be given a meaning as intended by the parties and that no implied term could be added to show that the performance assessment and confirmation or non confirmation of substantive appointment should occur at the conclusion of the probationary period of six months and that the learned trial Judge had erred in arriving at such conclusion.
[25] This argument of the Appellant is on the basis that the said clause is ambiguous and cited the decisions in Doe Dem. Pearson v Ries and Knapp S.C.1 Moo. & Sc.259; 1 L.J.C.P.73; Chapman v Bluck S.C.5 Scott.515; Arn.27; 7 L.J.C.P. 100; 2Jur.206; Whitworth Street Estates (Manchester) Ltd v James Miller and Partners Ltd and Another [1969] 2All ER210 to support the position that the conduct of the parties have to be considered to determine the intention of the parties to the contract. The first two cases dealt with leases of properties and the third case dealt with a building contract, where different considerations applied in such situations and therefore are not relevant to the situation envisaged in the present case. The argument is premised on the basis that the clause is ambiguous and that the interpretation that should be given to it should be as to what was intended by the parties by taking into account their conduct which Counsel submitted was not at variance as both parties were aware that the appointment was not confirmed. However as shown above the understanding of the Respondent was different when he said that he was not aware what the Town Clerk had meant when he had said that the timing was not right as it would have meant that he considered himself as having satisfactorily completed the six months period of probation and was awaiting approval of his confirmation.
[26] Although there is no ambiguity in Clause 5.1 relating to probation though claimed to be so by the Appellant, going further in respect of the above argument of the Appellant regarding the interpretation of ambiguous terms, it would be appropriate to consider the "contra preferentem" rule regarding interpretation. In Horne Coupar v Velletta & Company (2010) BCSC 483 The Supreme Court of British Columbia stated in relation to the said rule, thus:
"Contra preferentem is a rule of contractual interpretation which provides that an ambiguous term will be construed against the party responsible for its inclusion in the contract. This interpretation will therefore favour the party who did not draft the term presumably because that party is not responsible for the ambiguity therein and should not be made to suffer for it. This rule endeavours to encourage the drafter to be as clear as possible when crafting an agreement upon which the parties will rely. This rule also encourages a party drafting a contract to turn their mind to foreseeable contingencies as failure to do so will result in terms being construed against them., That there is ambiguity in the contract is a requisite of the application of this rule, however, once ambiguity is established, the rule is fairly straightforward in application."
[27] A similar view was expressed by Justice Fernando in State Distilleries Corporation v Rupasinghe (Supra) in relation to employment contracts:
"If the contractual terms are ambiguous, or admit of more than one interpretation, both equity and the principles of interpretation concur in requiring that they be interpreted contra preferentem, against the Employer and in favour of the employee. If in respect of an eventuality which could and should have been anticipated, two alternative provisions might have been made – one favourable to the Employer, the other to the Employee – the Court ought not imply the former; because the Employer having been in a position to do so, refrained from including the provisions advantageous to himself."
Therefore, in terms of the contra preferentem rule the argument raised by the Appellant favours the Respondent and not the Appellant.
Ground 5
[28] This ground is to the effect that the trial Judge erred in law and fact in holding that the Respondent was entitled to an increase in salary by 10% pursuant to Clauses 8(1) and 8(4) of the contract.
[29] The learned trial Judge after considering the clauses in the contract regarding termination of employment concluded that the Respondent's employment was terminated without notice or payment in lieu of notice and therefore was a summary dismissal. That the termination letter did not specify any misconduct of a serious nature and that there was no justification for the Respondent's summary dismissal as contemplated in Clause 12.5 of the contract. The trial Judge went further and stated that the termination was effected contrary to the arrangements specified in clause 12.6 of the contract and consequently that the Respondent was entitled to be paid the unexpired portion of his contract which was the period from 1 April 2005 to 16 May 2007. That the unexpired portion of the Respondent's contract included his wages or salary that he would have earned. The entitlement under clause 12.6 included any benefit to which the Respondent was contractually entitled and has been denied as a result of the dismissal. On that basis the Respondent's net loss of wages under the contract for the period 1 April 2005 to 16 May 2007 was $72,697.03. and also fixed the loss occasioned by the non receipt of the Appellant's payments to the Respondent's FNPF account at $9783.91.
[30] Thereafter the learned trial Judge considered the additions to or increases in basic salary and concluded that he was entitled to 10% of his net salary from the period 1 April 2005 to 16 May 2007, which was $7269.70.
[31] It was the contention of the Appellant that the learned trial Judge erred in granting that amount as an entitlement. According to the contract, Clauses 8(1) and 8(4) dealt with salary increase.
Clause 8(1) – "The salary rate will be reviewed annually by your Town Clerk/Chief Executive Officer on the basis of market rates, skills development, ability and performance as determined by the outcome of the performance review process outlined in Clause 9 below."
Clause 8(4) "A ten percent merit payment on the basic annual salary will be paid to you on satisfactory performance based on competency and meeting the strategic objectives as outlined by the performance review process in clause 9 below."
Clause 9 – Performance Review
Each year your performance will be reviewed through a joint meeting of you and your Town Clerk/Chief Executive Officer. The purpose of this review is to focus on the requirements of the job, outputs, and standards of performance. It will provide a forum where both parties can discuss your career development, opportunities for training, performance over the past 12 months and expectations for the next 12 months. Nothing shall prevent your Town Clerk/Chief Executive Office reviewing your performance more frequently if required; the Council encourages regular review and feedback of performance. Any agreement for personal training or development will be recorded and will become part of the department annual plan (subject to Council's budgetary provisions).
[32] A consideration of the above provisions would show that the 10% merit payment was not automatic and subject to the fulfillment of certain requirements based on a review of the Respondent's performance as contended by the Appellant. It is true that the Respondent was deprived of completing his full period of the contract by the Appellant. The merit increase was a contingency payment and depended on the review of the performance of the Respondent during his period of employment. It would be that even if he had completed the period of employment he may not have come up to the expected standard to merit such an entitlement. Therefore the Respondent would not be entitled to such an amount as salary increase and that amount would be deducted from the total sum awarded by the learned trial Judge.
Ground 6
[33] That the leaned trial Judge erred in law and fact in awarding damages for the unexpired portion of the contract without adjusting it with the duty on the Respondent to mitigate his loss.
[34] The learned trial Judge considered the evidence relating to mitigation of the loss as adduced by the Respondent and concluded that the evidence of the Respondent on the issue of mitigation was credible and reasonable and that the Respondent had discharged the onus and did comply with the duty to mitigate. The Respondent had not been able to secure alternative employment from the time of his termination of the contract in April 2005 to August 2009. It is on a consideration of such evidence that the award was made in favour of the Respondent and thus it is incorrect to state that the learned trial Judge failed to consider the duty cast on the Respondent to mitigate his loss.
[35] It was also submitted that the learned trial Judge failed to consider that the employment status of the Respondent was unconfirmed and thus temporary in nature and therefore the full contractual benefit of three years fixed contract was not available to the Respondent. This argument is fallacious as it is the Appellant who considered the Respondent as having such a status, which as shown above due to the own lapse on the part of the Appellant to take appropriate steps soon after the expiry of the 6 month probationary period conferred the Respondent the status of a confirmed employee.
Conclusion
[36] Of the grounds of appeal adduced by the Appellant in appealing against the judgment of the High Court, only ground 5 succeeds and due adjustment would be made in the final order of this Court.
[37] As the Respondent was absent and unrepresented there would be no costs awarded against the Appellant in this Court.
Orders of Court:
Lecamwasam JA
[38] I agree with the reasons and the conclusions of Chandra JA.
Mutunayagam JA
[39] I also agree with the reasons and the conclusions of Chandra JA.
Hon. Justice S Chandra
JUSTICE OF APPEAL
Hon. Justice S Lecamwasam
JUSTICE OF APPEAL
Hon. Justice A B Mutunayagam
JUSTICE OF APPEAL
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URL: http://www.paclii.org/fj/cases/FJCA/2013/97.html