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Ronia v Solomon Islands National Provident Fund Board [1997] SBCA 5; CA-CAC 6 of 1996 (24 April 1997)

THE COURT OF APPEAL OF SOLOMON ISLANDS

.....................................................................

IN THE SOLOMON ISLANDS COURT OF APPEAL
Civil Appeal No.6 of 1996
(High Court Civil Case No. 53 of 1996)

BETWEEN

EDWARD RONIA
Appellant

AND

SOLOMON ISLANDS NATIONAL PROVIDENT FUND BOARD
Respondent

Kapi P (Ag) Williams JA Goldsbrough JA

Date and Place of hearing: 22 April 1997, Honiara
Date of delivery of Judgment: 24 April 1997.

Judgment of the Court

This appeal from the decision of Palmer J. delivered on 22 August 1996 involves the proper meaning or interpretation of provisions of contract of employment with regard to entitlement to accommodation.

The background giving rise to this appeal may be summarised as follows. The plaintiff (hereinafter referred to as the “Appellant”) initially entered into a contract of employment with Solomon Islands National Provident Fund Board (hereinafter referred to as the “Respondent”) on 9 January 1990 as an Assistant General Manager (Finance). Clause 19 of the contract provides as follows:

“ 19.1 The Board shall provide the employee with a fully furnished house.

19.2 Where the employee is not provided with accommodation by the Board rent free, the Board shall pay rental allowance at the rate of fifteen percent (15%) of the basic salary.”

Pursuant to this entitlement the appellant was accommodated at a private residence by the respondent.

On 6 March 1990, the appellant obtained a loan from the respondent and purchased a house at Vura, Honiara. He obtained a further loan in October 1990 for maintenance and extension to his house. On 12 February 1991, the appellant moved into his own house.

In late November 1992 when the appellant was acting General Manager, he moved into one of respondent’s house at Tasahe and put out his own house on the market for rent.

It is not disputed that the appellant was well aware of the policy of the respondent that staff of the respondent other than the General Manager, who owns a private house or who obtains a loan from the respondent to purchase a house, would not be provided with private accommodation by the respondent but instead would be entitled to a housing allowance in lieu.

In December 1992, the appellant sought to review the respondent’s policy in respect of accommodation for the Assistant General Managers. The respondent rejected the application and re-confirmed its policy. The respondent advised the appellant of this decision on 24 February 1993.

In March 1993 the appellant offered to pay a rental of $1,000.00 per month for the respondent’s house at Tasahe. This offer was rejected by the respondent.

At its meeting on 29 August 1994, the respondent directed that those staff who owned or whose spouse owned a house and who were residing in one of respondent’s houses be given three months notice to vacate the respondent’s houses or alternatively be required to pay the commercial rates for the houses.

In November 1994, the appellant made another application to the respondent to review the policy on accommodation for the Assistant General Managers. At its meeting on 21 December 1994 the respondent again rejected this application. At this same meeting the respondent demanded that the appellant move out of the house by 31 December 1994 or pay the commercial rates for the house from that date.

The appellant did not move out of the house as demanded. At its meeting on 7 February 1995, the respondent directed that the appellant starts paying the monthly rental of $2750.00 with effect from February 1995. The respondent further resolved that if the directions were not complied with the appellant would be dismissed.

The dispute between the parties was then referred to the Trade Disputes Panel. Counsel have advised us that no decision has yet been made by the Panel. This matter was raised in the Court below where it was argued that the proceedings before the Court was an abuse of the process of court when the same issue was pending before the Panel. The trial judge rejected the submission and there has been no cross appeal on this point. It is therefore not relevant in respect of the appeal before us.

The appellant was still employed as Assistant General Manager and was still living in the respondent’s house when on 4 October 1995, the parties entered into another contract of employment (hereinafter simply referred to as the “New Contract”). This contract was in fact signed sometimes in November but dated 4 October. Clause 13 of the new contract provides:

“The Board shall either provide accommodation for the Employee or pay him a housing allowance at the rate specified in Schedule 2.”

The schedule provides for the rate at (15%) of the salary.

The respondent’s policy on accommodation with regard to Assistant General Managers did not change. The Chairman of the respondent then wrote to the appellant yet again requesting him to vacate the house or be required to pay up the arrears of rent for the months of October, November and December. In response, the appellant challenged the legality of the Chairman’s letter. At its meeting on 17 January 1996 the respondent resolved to terminate the services of the appellant under cl 17 of the new contract and the appellant was paid money in lieu of three months notice.

The appellant by originating summons sought the following declarations:

“(1) that under clause 19 of the Contract of Employment entered into between the Plaintiff and the Defendant on 9 January 1990 the Defendant had an obligation to provide housing to the Plaintiff and that no discretion whatsoever was vested in the Defendant to do otherwise.

(2) that clause 13 of the Contract of Employment entered into between the Plaintiff and the Defendant on 4 October 1995 cannot be interpreted to have the effect of removing rights and entitlements which the Plaintiff was already enjoying under the earlier contract dated 9 January 1990.

(3) that the Defendant’s action in terminating the employment contract which it entered into with the Plaintiff on 4 October 1995 was unlawful and of no effect, for the reasons that:-

(a) it acted outside the terms of the contract; and or in the alternative,

(b) it acted in breach of the rules of natural justice.”

The appellant claimed orders:

(1) to re-instate him to his position.

(2) In the alternative the respondent pay damages for breach of contract.

(3) that the respondent pays the cost of the application.

In the High Court, the appellant abandoned the first order. Two issues remained to be considered by the High Court. The first was, what is the effect of clause 19 of the contract? Second, whether the respondent breached the terms of the contract when it terminated the appellant’s employment?

The High Court concluded that in order to determine whether the termination was lawful or not it had to consider whether the instructions to vacate the house or to pay commercial rates given by the respondent come within cl 19 of the contract of employment. In considering this issue, the Court took into account the surrounding circumstances and policy of the respondent with regard to accommodation and concluded that there was no obligation on the part of the respondent to provide the appellant with a fully furnished house. The Court further concluded from this that the refusal to obey the instructions would amount to gross misconduct pursuant to cl 16 (c) of the contract of employment dated 4 October 1995. The Court further held that the termination and the payment of three months salary in lieu was proper under cl 17 of the contract. In the result the High Court found that the termination was lawful and therefore refused to make any orders in respect of damages.

The appellant has appealed against the decision on two grounds:

(a) the learned Judge wrongly and incorrectly interpreted clause 19 of the contract .of employment entered into between the appellant and the respondent dated 9 January 1990 and also clause 13 of the employment contract dated 4 October 1995.

(b) the learned Judge erred in his ruling that the Respondent’s housing policy formed an implied term of the contracts of employment governing the relationship between the appellant and the respondent.

The grounds of appeal relate to the proper interpretation of cl. 19 of the contract dated 9 January 1990 and cl. 13 of the contract dated 4 October 1995. It is immediately clear that the trial judge primarily dealt with cl 19 of the contract dated 9 January 1990 and did not deal with cl 13 of contract dated 4 October 1995.

Before we deal with the issues of interpretation, we should clarify the reference to the two clauses in the two contracts of employment and their relevance to the issues raised in the cause of action instituted in the High Court.

During the currency of the contract dated 9 January 1990, dispute arose as to the rights of parties pursuant to s 19 of the contract. In a letter dated 8 February 1995, the Chairman of the Board set out the background to the dispute relating to the issue of accommodation. In so far as it is relevant, the Chairman indicated that since the appellant failed to move out of the house, the Board directed that he should pay a monthly rental of $2,750.00 commencing on 1 February 1995. The letter also made allegations of misconduct by the appellant and he was given an opportunity to reply to these charges. As we have indicated before, these disputes were referred to the Trade Dispute Panel and are still pending.

As far as we can tell from the record, the respondent did not take any action to recover the rents that became due nor did it terminate the appellant’s employment. That was the position when the new contract of employment was entered into between the parties on 4 October 1995. By cl 2 of the new contract, the parties rescinded the previous contract.

It would follow from this that the appellant did not suffer any damage under the old contract. Clause 19 can have no relevance to any claim for damages. The only relevance cl 19may have is the claim by the respondents for rentals at commercial rates for the period the appellant remained in the respondent’s house commencing on 1 February 1995. As no objection was taken in the court below that the declaration sought in the originating summons did not have any relevance to the claim for damages, we will address the interpretation of cl 19 for the related purpose we have set out above.

The relevant contract to consider with respect to the claim for damages by the appellant for unlawful dismissal is cl 13 of the contract dated 4 October 1995. The appellant was terminated during the currency of the new contract.

Interpretation of Clause 19 of Contract dated 9 January 1990

Counsel for the appellant has submitted that under cl 19 (1), the appellant is entitled to fully furnished housing. He further submitted that in the circumstances of this case, the appellant was in a house provided by the respondent and therefore the respondent cannot deprive him of that right under cl 19 (2).

Counsel for the respondent simply supported the reasoning of the trial judge, namely, that there was no obligation on the part of the respondent to provide fully furnished housing but may pay a rental allowance at 15% of the salary in lieu thereof.

We have considered the submissions and we consider that the trial judge was correct in his interpretation of cl 19 of the contract. The argument put forward by counsel for the appellant is tenable if cl 19 (1) stood on its own. However, cl 19 has to be read as a whole. The important words in cl 19 (2) are “Where the employee is not provided with accommodation by the Board rent free,..”. This sub-clause provides the context in which proper meaning may be given to sub-clause (1). It envisages that the respondent may not provide such accommodation and the sub-clause goes on to provide that a rental allowance in lieu may be paid at the rate of 15% of the basic salary. In what circumstances the respondent may not provide accommodation is not spelt out. In our view, these words are wide enough to include the circumstances in the present case. That is to say if the respondent has a house but decides for any reason it will not make this house available to the appellant, he will be entitled to receive the rental allowance in lieu of free accommodation. We cannot accept the position which is implied in the submission of counsel for the appellant that as the respondent has a house, it is legally bound to make this house available to the appellant.

We have reached this conclusion from a pure construction of the words of clause 19 as a whole. We would dismiss this ground of appeal.

In view of the conclusion we have reached, we do not consider that it is necessary to deal with the second ground of appeal which deals with whether or not the respondent’s housing policy could form an implied term of the contract.

Clause 13 of Contract of Employment dated 4 October 1995

We have already pointed out that the trial judge did not deal with clause 13 of the contract in his judgment. We find that the issue of cl 13 of the contract was raised by paragraph (2) of the originating summons. The contract formed part of the evidence (see pages 34-43 of the record) and that there was clear evidence that the termination was carried out in accordance with the terms of the new contract.

In the circumstances, we find that the trial judge ought to have addressed the issue. Notwithstanding that the trial judge did not address the issue, this Court has power to deal with the issue under s 12 of the Court of Appeal Act.

The terms of clause 13 are expressed in clear terms. The words clearly provide for alternative benefits with regard to accommodation, namely, provision of accommodation by the respondent or a housing allowance at 15% of the basic salary. That of course is the clear meaning of clause 13 and counsel for the appellant conceded this in his oral submissions. In the circumstances, it is not necessary to consider whether the respondent’s housing policy may be an implied term of the new contract.

It would follow from this conclusion that when the respondent gave instructions to the appellant to vacate the house and pay commercial rates for the respondent’s house for the relevant period (see paragraph 32 of affidavit of James Apaniai sworn 29 February 1996 at pages 46-53 of the record), it was not acting in breach of cl 13 of the contract.

The trial judge further found that refusal to obey the instructions of the respondent would result in gross misconduct under cl 16 (c) of the contract. It is not necessary to discuss further the grounds for termination because the appellant was terminated under cl 17 of the contract which does not require any ground for termination.

In the end result we would dismiss the appeal. The appellant should be ordered to pay the appellant’s costs of and incidental to this appeal.

By The Court

Kapi (Ag) P
(Acting President)