Home | Databases | WorldLII | Search | Feedback Court of Appeal of Solomon Islands

Earthmovers (Solomons) Ltd v Solomon Islands National Union of Workers [1998] SBCA 2; CA-CAC 10 of 1998 (23 December 1998)

IN THE SOLOMON ISLANDS COURT OF APPEAL

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

IN THE SOLOMON ISLANDS COURT OF APPEAL
Civil Appeal Case No. 10 of 1998
(High Court Civil Case No. 1 of 1998)

BETWEEN

EARTHMOVERS (SOLOMONS) LIMITED

KALENA TIMBER COMPANY LIMITED

EASTERN DEVELOPMENT ENTERPRISES LIMITEDAND PACIFIC TIMBERS
Appellant

AND

SOLOMON ISLANDS NATIONAL UNION OF WORKERS
Respondent

Mason P, McPherson JA, Williams JA

Date and Place of hearing: 19th October 1998
Date of delivery of Judgment: 23rd December 1998

JUDGMENT

THE COURT: This appeal arises out of a referral of a trade dispute made by the Minister for Commerce, Employment and Tourism under s. 4(2) of the Trade Disputes Act 1981 (“the Disputes Act”) to the Trade Disputes Panel (“the Panel”). The award made by the Panel required reinstatement of the workers who had been dismissed by the appellants, the appellants being a group known as “Earthmovers” of which the first appellant is the holding company. The appellants brought an appeal to the High Court under s. 13 of the Disputes Act which enables an appeal to be brought against an award of the Panel on a question of law. The appeal from the award was dismissed by Palmer J. and the appeal to this Court is against the order made by Palmer J. in dismissing that appeal.

The facts

The account of the facts which follows is taken from the judgment of Palmer J. On or about 15 June 1995, the appellants, who are employers of labour in connection with the businesses which they carry on, entered into a Collective Agreement with the respondent Union. The Agreement was expressed to be effective for a minimum period of 12 months from 1 January 1995. The Agreement was not renewed.

Logs of claims were sent by the Union to the appellants in an endeavour to secure an amended Agreement. However, negotiations did not take place. This led to a strike notice issued by the Union on 27 September 1996 which came to nothing. In August-September 1997 another log of claims was sent and a further strike notice issued. On this occasion a strike took place following the notice. On 29 October 1997 the appellants issued notices terminating the services of the employees who went on strike.

On the same day the appellants filed an originating summons in the High Court seeking various declarations under the Essential Services Act 1963, the Unfair Dismissals Act 1982 (“the Dismissals Act”) and the Collective Agreement. It was agreed between the parties in the proceedings before Palmer J. that the issues arising on the originating summons would also be canvassed before Palmer J.

The decision of the Panel

The referral to the Panel, which was dated 31 October 1997, stated that a trade dispute had arisen between the Union and Earthmovers. The referral did not identify or characterise the dispute except by reference to a series of matters and events which were recited as follows:

“1. [The Union] is representing its financial members who are, for the purposes of the referral, employees of [Earthmovers].

2. [The Union] pursuant to its letter of 25 August 1997 submitted the following claims for the year 1997.

(a) That [Earthmovers] to formally negotiate with [the Union] as the eligible and representative of employees who are financial members of the Union.

(b) That a 11.8% general wages increase be awarded across the board on the wage structure, allowances and incentives and effective as from 1st January 1997.

(c) That after formal negotiation and a settlement is reached, that a collective agreement to be signed between the parties concerned.

3. [The Union] by its letter of 2nd September 1997 issued a 28 days strike notice upon [Earthmovers].

4. The financial members of [the Union] went on strike after the expiry of the strike notice.

5. The striking employees were terminated from employment pursuant to a letter dated 9th October 1997 by [Earthmovers].

6. [Earthmovers] has commenced by originating summons ... an action naming [the Union] as First Respondent ...

7. Neither [the Union] nor [Earthmovers] has referred the matter to the [Panel] for conciliation.”

The referral then continued:

“NOW THEREFORE, it appearing to the Minister responsible for labour that further prolonging the trade dispute may create public disorder and have a negative effect on the economy of the Solomon Islands. I DANIEL ENELE KWANAIRARA, Minister for Commerce, Employment and Tourism, acting pursuant to section 4(2) of the [Disputes Act], hereby refer the trade dispute to the [Panel] for conciliation.”

It has not been suggested that the concluding words “for conciliation” involve any limitation on the Panel’s powers under the Disputes Act.

At a preliminary hearing on 11 November 1997 the Panel rejected the appellants’ submission that the Panel lacked jurisdiction to deal with the matters referred pending the hearing of the High Court action commenced by the appellants. The Panel ruled that it had jurisdiction with respect to those matters except for the status of the striking employees and the issue of the strike. The High Court granted leave to the appellants to challenge the Panel’s decision and prohibited the Panel from further proceeding with the case. On an application by the Union to set aside the High Court’s orders, on 14 January Muria CJ. delivered judgment, finding that the Panel had jurisdiction to deal with the issues in the referral and that the status of the dismissed employees was plainly a matter within the Panel’s jurisdiction.

The Panel then proceeded to make an inquiry into the whole of the dispute which had been referred by the Minister.

The Panel, after reviewing comprehensively the course of the dealings between Earthmovers and the Union, found that upon the expiration of the 1995 Collective Agreement, Earthmovers in principle continued to recognise the Union whilst stubbornly refusing to enter into a written recognition agreement. The Panel found that Earthmovers failed to honour its obligation under the Agreement to review the minimum period of 12 months with a view to the extension of that period and, further, that Earthmovers failed to notify the Union in early 1996 that it had withdrawn its recognition of the Union’s right to represent employees who were members of the Union. In the circumstances the Panel considered that Earthmovers as a responsible employer should have opted for union representation.

The Panel recorded that it was not in dispute that Earthmovers was given sufficient notice of a strike to take a proper course of action. On this footing the Panel found that the strike notice and the strike action taken was in furtherance of a trade dispute. In this respect the Panel referred to the definition of “trade dispute” which appears in the glossary in the schedule to the Disputes Act.

The Panel then concluded that the workers who went on strike in pursuance of a trade dispute whose employment was terminated were unlawfully dismissed. On the basis of the findings that there was in existence a trade dispute and that the Union was mandated by the workers to issue a strike notice in relation to the dispute, the Panel made the following awards:

(1) That the employer formally negotiate with the Union on its proposed recognition and collective agreements.

(2) That the dismissed workers to be re-instated with effect from the date of termination.

(3) The employer party to pay to all its employees represented by the Union an increase of 10% increase the board on wages, allowances and incentives with effect from 1 January 1997.

Before the Panel delivered its decision, 200 approximately of the 400 employees who had been dismissed had been re-instated in the employment of Earthmovers.

The High Court proceedings

The appeal under s. 13 of the Disputes Act was heard by Palmer J. On 22 June 1998, the learned judge delivered judgment and made orders dismissing the appeal, upholding the orders made by the Panel in its award and requiring the appellants to pay the costs of the appeal.

The judge held that the Panel erred in law in one respect, namely in concluding that the workers were unlawfully dismissed. His Lordship held that strike action on the part of employees constitutes a repudiatory breach of contract which entitles the employer to accept the repudiatory breach and terminate the contract. The consequence was that, in the present case, the appellants were entitled to terminate the contracts of the striking employees and that the Panel was in error in finding that the termination of the employees’ employment was unlawful.

Having reached this conclusion, his Lordship went on to say that the Panel had power to order re-instatement of the employees and that it had exercised this power after concluding that the dismissal of the workers was unjustified in the circumstances; in other words, that it was unreasonable or unfair. His Lordship conceded that the Panel did not expressly state that the dismissal was unjustified and unfair, but considered that the thrust of the Panel’s remarks amounted to such a finding.

In the final analysis, he thought that the Panel, though describing the dismissal of the workers as “unlawful”, meant that it was “unjustified”, in the sense of being unreasonable or unfair. As his Lordship found the action of the appellants unreasonable in the circumstances, he saw no reason to interfere with the findings of the Panel.

The appellants’ case

The appellants sought to challenge the orders made by Palmer J. on several grounds. First, they sought leave to amend their notice of appeal to challenge the validity of the referral in that the instrument of referral did not recite all the matters stated in s. 4(2)(a), (b) and (c) of the Disputed Act. In particular, it was suggested that the instrument failed to state that it appeared to the Minister that industrial action is being or is likely to be taken, that it is the source or potential source of an interruption in the supply of goods or services and that this interruption must be what is likely to create public disorder or affect the national economy. In other words, it is not sufficient that there is a trade dispute which of itself is likely to create public disorder.

The appellants’ application for leave to amend the notice of appeal was refused to the extent that it sought to raise this point. This was the first time that the point was raised in the proceedings. The validity of the referral was not in issue before the Panel, in the proceedings before Palmer J. or in the proceedings commenced by originating summons which culminated in a judgment by Muria C.J. on 14 January 1998 when his Lordship set aside an order granting leave to issue prohibition proceedings against the Panel. Further, there was the possibility, which we could not discount, that evidence might have been called to show the matters identified in s. 4(2) of the Disputes Act or that the point might otherwise have been remitted, had it been raised before the Panel, Palmer J. or Muria C.J.

The appellants then argued that

(1) the Panel had no power to award re-instatement;

(2) the Panel erred in law in treating the “illegality” of the dismissal as the sole criterion in the determination of the issue of re-instatement; and

(3) Palmer J., having correctly held that the Panel was in error in finding dismissal to have been “unlawful”, should have set aside the award and remitted the matter to the Panel for determination according to law.

Did the Panel have power to order re-instatement?

The appellants relied on the absence in the Disputes Act of an express general power to order re-instatement and the presence in the Act of a limited specific provision with respect to re-instatement which has no application to this case. The appellants also submitted that the Disputes Act, the Dismissals Act and the Employment Act 1981 constitute a legislative scheme, manifesting an intention that compulsory re-instatement against the will of the employer is an exceptional step which is permissible in extremely limited circumstances for which the Disputes Act makes specific and exclusive provision. In support of these submissions, the appellants referred to s. 21 of the Interpretation and General Provisions Act 1978 which provided that an Act amending any other Act shall be read as one with the other Act. The Dismissals Act is an Act which amends the Disputes Act. The appellants also referred to s. 9 of the same Act which provides that each Act is to be read as a whole.

True it is that the Employment Act, which is directed to protecting the Interests of employees, provides for redundancy payments for dismissed employees and makes no provision for their re-instatement. True it is also that the Dismissals Act, in giving jurisdiction to the Panel to deal with complaints of unfair dismissal, does not authorise the Panel to make an order for re-instatement. Instead s. 6(4) provides that if the Panel finds the complaint is well-founded and considers that it would be both practicable and fair for the complainant to be re-engaged by the employer, the Panel must make recommendation to that effect, stating the terms on which they consider that it would be reasonable for the complainant to be re-engaged. If such a recommendation is not complied with, the Panel must make an award of compensation to be paid by the employer in respect of the dismissal (s. 6(5)). In other words, the Panel cannot require an employer to reinstate a dismissed employee.

It follows, so the argument ran, that the interpretation of the Disputes Act must be approached in the light of what appears to be a legislative intention opposed to compulsory re-instatement. When the Disputes Act is so read, no power to order should be implied. Indeed, it was argued that it is significant that no such express power is conferred upon the Panel and that the only specific power to order re-instatement is given to the High Court by s. 10(6)(b) of the Disputes Act in a case where an employer, in contravention of s. 10(1), has terminated the employment of an employee after a trade dispute has been referred to the Panel.

These arguments, in our view, fail to recognise and give effect to the important purposes which the Disputes Act serves in the legislative scheme. Whereas the Dismissals Act simply provides a mode of dispute resolution as between an individual employee and employer in cases of wrongful dismissal, the purpose of the disputes Act is to provide a means of encouraging the settlement of trade disputes and to make binding awards where negotiation fails. Section 4(1) enables a party to a trade dispute to refer the dispute to the Panel. More importantly s. 4(2) enables the Minister to refer to the panel a trade dispute where it appears to him:

“(a) that, in connection with a trade dispute, any industrial action is being or is likely to be taken; and

(b) that the action ... has caused or would cause an interruption of goods or the provision of services; and

(c) that the interruption is or would be of such a nature or on such a scale as to be likely to affect the national economy or national security, or create public disorder, or endanger the supply of essential goods or services”.

These provisions, more especially s. 4(2)(a), indicate that the Disputes Act is directed to the settlement by conciliation and arbitration of trade disputes likely to result in industrial action with the consequences mentioned in s. 4(2)(b) and (c).

In this context, the Disputes Act seeks to resolve a dispute between parties such as employees and unions where the subject matter of the dispute may and almost certainly will extend beyond the question whether an individual employee was wrongfully dismissed.

A “trade dispute”, according to the glossary in the schedule to the Disputes Act, means

“A dispute between employees and employers, or between groups as employees, which is connected with one or more of the following matters ...”

Of the matters which follow, para. (b) is in these terms:

“(b) engagement or non-engagement, or termination or suspension of employment or the duties of employment of one or more employers”.

Re-instatement is one obvious means of settling a trade dispute involving the termination of the employment of employees.

The power of the Panel to make an award in settlement of a dispute is expressed in very general terms in s. 6(1). It simply provides that where the Panel

“are not of the opinion that the dispute is likely to be settled by negotiation, they shall themselves inquire into the dispute and shall make an award”.

That provision constitutes the authority which the Panel has to make awards in settlement of trade disputes. That authority is sufficiently general to comprehend the making of such an award as may, in the opinion of the Panel, be necessary or desirable for the settlement of a trade dispute. It stands to reason that, in the case of some trade disputes, the making of an award for compulsory re-instatement of dismissed employees would be a necessary or desirable solution.

Experience shows that, at the centre of many serious industrial disputes, including those which have the potential to affect the national economy or public order, is a question about the re-employment of workers who have been dismissed (whether their dismissal is justified or not). The existence of a power to take into account this question and of a power to order the re-employment of those workers, where appropriate, notwithstanding the adverse consequences of such an order for an unwilling employer, is essential for the resolution of such disputes. There is, accordingly, strong reason to conclude that the general power to “make an award” comprehends the power to order re-instatement.

That the Panel must take account of matters extending beyond the interests of the parties is made clear by s. 6(3) and 6(4). Section 6(3) provides that the Panel, when conducting an inquiry under s. 6(1), shall, as well as giving the parties an opportunity to submit evidence

“also give an opportunity to the Minister, and may give an opportunity to any person who, in their opinion has an interest in the dispute”.

Section 6(4) then provides:

“The Panel shall, in considering what award to make in any trade dispute, take account not only of the interests of the parties to the dispute but also of the likely effect of the award on other persons and on the economy as a whole”.

The high importance of resolving a trade dispute is recognised in s. 6(2) of the Dismissals Act which provides that no complaint of unfair dismissal by an employee under s. 6(1) of that Act may be considered by the Panel while a referral of a trade dispute is pending before the Panel.

When the provisions of the Disputes Act are considered in the light of their context and their purpose, there is no foundation for limiting or qualifying the general words in s. 6(1) of that Act by reference to the absence of power to order re-instatement in the Dismissals Act and the Employment Act. Nor does the specific power given by s. 10(6)(b) of the Disputes Act to the High Court to make an order requiring re-instatement provide a basis for limiting or qualifying the general words of s. 6(1). The power to make such an order is given in case of contravention of a prohibition against the taking of certain actions, including termination of employment of employees, pending the negotiation or determination of a dispute pending before the Panel. It is a specific power given to the Court enabling it to deal with a particular situation in circumstances where the Court would otherwise lack that power. That being the reason for inclusion of the power, its presence cannot justify a legislative intention or implication which seeks to restrict the general authority of the Panel to make an award in settlement of a trade dispute.

Our conclusion that s. 6(1) of the Disputes Act arms the Panel with a power to award re-instatement of dismissed employees accords with the decision of Palmer J. in this case and with the previous decisions to which he referred, namely Solomon Taiyo Ltd v SINUW (No.1) 1985/1986 SILR 27 and Solomon Taiyo Ltd v SINUW (No.2) 1985/1986 SILR 235.

We should add that the instrument of referral expressly referred to the status of the dismissed employees in the trade dispute referred to the Panel. There was, accordingly, an element of the dispute which had the potential to attract an exercise of the power to award re-instatement. The ground of appeal is therefore rejected.

Error of Law by the Panel

The appellants’ final ground of appeal relates to the error of law on the part of the Panel which was identified by Palmer J. That error was the Panel’s finding that Earthmovers “unlawfully” dismissed its employees after the strike was called. Notwithstanding the error of law, Palmer J. dismissed the appeal to the High Court on the ground that, when the Panel’s decision is read in its entirety, it should be understood as incorporating a finding that the employer was not justified in dismissing the employees.

The appellants submitted that, once a tribunal misdirects itself on a question of law, the misdirection vitiates the tribunal’s decision, unless it is established that the decision “is plainly and unarguably right notwithstanding that misdirection”, to repeat the words of Sri John Donaldson M.R. in Dobie v Burns International Security [1984] EWCA Civ 11; (1985) 1 WLR 43 at 49. The correctness of that proposition was not contested by the respondent.

That Palmer J. was correct in finding that the Panel was in error in holding that the employees were unlawfully dismissed is clear enough. The Panel seems to have thought that because the strike action was taken in furtherance of legitimate industrial demands that circumstance gave the strike a legal character which rendered dismissal “unlawful”. What was meant by the description “unlawful” in this context is not altogether clear; presumably it meant “in breach of contract”. As Palmer J. pointed out, however, the act of going on strike constitutes a fundamental breach by an employee of his contract of employment, the act of going on strike amounting to a unilateral withdrawal of the employee’s services (Chappell v Times Newspapers Ltd (1975) 2 All ER 233 at 239, 240; Morgan v Fry (1968) 3 All ER 452; Simmons v Hoover (1977) QB 248; SINUW v H.T.C. (1988/1989) SILR 433; Solomon Islands National Provident Fund Board v SINUW (Muria C.J. Civil Cases Nos. 437 and 438/1993, judgment delivered 9 August 1994). The act of going on strike entitles the employer to treat that act as a repudiatory breach and terminate the employment of the employee.

Reference was made to clause 12 of the Collective Agreement which provided that the parties

“shall not resort to strike or lockout ... until all agreed and prescribed negotiations have been completed and exhausted”.

We agree with Muria C.J. who said in Solomon Islands National Provident Fund v SINUW (supra) that “those words to not confer the right to strike”.

There is much to be said for the view taken by Palmer J. that the Panel considered that, independently of the “unlawful” character of the dismissal, the circumstances that the appellants were otherwise unjustified in dismissing the employees required the making of an order for re-instatement. However, it seems to us that there is sufficient doubt about the question to require us to remit the matter to the Panel.

In taking this course we should make the following comments. Section 6(4) of the Disputes Act, as we have already observed, requires the Panel to take account not only of the interests of the parties, but also of the likely effect of the award on other persons and on the economy as a whole. In taking account of the interests of the parties, the Panel must direct its attention to all the relevant circumstances and they include the conduct of the parties in relation to the review of the Collective Agreement, the question whether the dismissal was in breach of contract and whether the dismissal of the employees was otherwise unreasonable, unjustified or unfair. If is inevitable that the Panel will have regard to the fairness or unfairness of the dismissal, notwithstanding that this is an issue which would otherwise arise under the Dismissals Act on a complaint under that Act.

In relation to the interests of the parties, we note that Dr Griffith QC for the Appellants did not challenge the statement made by the Panel that it

“was of the opinion that in principle the agreement [that is, the Collective Agreement] has not lapsed and the provisions in the Agreement could not be limited to the period between 1st January to 30th December 1995”.

Indeed, the Panel’s finding on this question was not challenged before Palmer J, perhaps because it was thought not to involve an error of law.

We must emphasise, however, that the Panel cannot confine its attention to the interests of the parties. The Panel must have regard to the likely effect of the award on other parties and the national economy. That is a matter which is relevant to the question whether re-instatement should be awarded.

Costs

Although the appellants have succeeded in the appeal on one point and should have succeeded in the High Court on that point, they were unsuccessful on a number of issues before Palmer J. and in this Court on the issue of the Panel’s power to order re-instatement, an issue which occupied much of the time taken in argument. In these circumstances, an order that each party bear its own costs of the proceedings is the appropriate order.

Orders

In the result we make the following orders:

(1) Appeal allowed.

(2) Set aside the orders made by Palmer J. and in lieu thereof order that

(a) appeal allowed;

(b) remit the matter to the Trade Disputes Panel to be determined in accordance with law; and

(c) each party to bear its own costs of the proceedings.

3) Each party to pay its own costs of the appeal.

Mason P.
McPherson J.A.
Williams J.A.