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Fonua v Tonga Communications Corporation Ltd [2008] TOLawRp 33; [2008] Tonga LR 167 (25 July 2008)

IN THE COURT OF APPEAL OF TONGA
Court of Appeal, Nuku'alofa

AC 04/2008

Fonua

v

Tonga Communications Corporation Ltd

Burchett, Salmon, and Moore JJ
16 July 2008; 25 July 2008

Employment law – wrongful dismissal – damages confirmed

For the full facts and a history of the proceedings, see Fonua v Tonga Communications Corporation Ltd [2005] Tonga LR 55, Tonga Communications Corporation Ltd v Fonua [2005] Tonga LR 315 (CA), Fonua v Tonga Communications Corporation [2006] Tonga LR 230 (CA), and Fonua v Tonga Communications Corporation [2007] Tonga LR 212.

The appellant appealed against the Supreme Court judgment which awarded the appellant damages in the sum of $150,846, for his wrongful dismissal in July 1999 by the Tonga Communications Corporation Ltd.

Held:

1. The Supreme Court was correct in concluding that the Commission could dismiss the appellant by giving reasonable notice. Accordingly, the way the damages were calculated by reference to what was a reasonable period of notice, was correct.

2. The appeal was dismissed with each party to bear their own costs.

Cases considered:

Auckland Transport Board v Nunes [1952] NZLR 412

Fonua v Tonga Communications Corporation Ltd [2006] Tonga LR 226 (CA)

Konski v Peet [1915] 1 Ch 530

McClelland v Northern Ireland General Health Services Board [1957] 1 WLR 594

Wellington Clerical Union v Greenwich [1983] ACJ 965

Statute considered:

Tonga Telecommunications Commission Act (Cap 96)

Counsel for the appellant: Mr Niu
Counsel for the respondent: Mr Tu'utafaiva

Judgment

[1] This is an appeal against a judgment of Andrew J of 14 December 2007, awarding the appellant damages in the sum of $150,846, for his wrongful dismissal in July 1999 by what is now called the Tonga Communications Corporation Ltd ("the Corporation"). At that time, his employer was the Tonga Telecommunications Commission ("the Commission") whose role and powers have been assumed by the Corporation. It is unnecessary to detail the background leading to the appellant's dismissal and the history of litigation in the Supreme Court. Both are set out in the reasons for judgment of the Court of Appeal of 16 August 2006 in Fonua v Tonga Communications Corporation Ltd [2006] Tonga LR 230 (CA).

[2] In this appeal, the appellant challenges the reasoning of Andrew J in two respects. The damages were calculated on the basis that the Corporation would have been entitled to dismiss the appellant by giving notice. His Honour concluded that one year's notice was reasonable notice and, on that basis, calculated one element of the damages as being the salary lost for that year (together with interest). The appellant contends that his employment with the Corporation was, in effect, permanent employment and the damages should have been calculated on that basis. The second aspect of his Honour's reasoning challenged by the appellant was that the damages were calculated by reference to the appellant's salary as the Commission's Chief Engineer which was the position he held at the time of the wrongful dismissal. The appellant contends that the calculation should have been made, in the main, by reference to the salary of General Manager. On the appellant's case, this was the position to which he would have been appointed, had he not been dismissed, several months after the time the dismissal occurred.

[3] It is convenient to consider first the argument that the appellant's employment was, in effect, permanent employment. We should begin by noting an observation made by the Court of Appeal in its reasons for judgment of 16 August 2006. The Court said:

[24] Counsel for the Corporation conceded in the appeal, that having regard to the Commission's staff regulations promulgated in January 1998, the applicant could only be dismissed for gross misconduct and then, it appears, only after the procedures of charging the applicant had been followed: see generally reg 4.2 of section 12.5 of those regulations. The position appears to be analogous to that considered by the Privy Council in Commodities Board v Christine 'Uta'atu [1990] Tonga LR 92.

[4] This concession appears to have been withdrawn and the Commission successfully argued before Andrew J that the appellant's employment could have been terminated by giving reasonable notice.

[5] The starting point in considering whether this is correct is the provisions of the Tonga Telecommunications Commission Act (Cap 96). Section 10 of the Act conferred on the Commission a range of powers in the following terms:

10. The Commission has such powers as necessary for the purposes of this Act, and in particular, and in addition to any other powers conferred on it by this Act, the Commission has power to-

..........

(d) engage, employ, pay and dismiss such officers and staff as it deems necessary for the conduct of its business, in accordance with the provisions of this Act;

(e) provide for persons in its employment or their dependants by means of insurance, pension or Provident fund or otherwise, pecuniary benefits upon retirement, death or termination of service or in the event of illness;

.........

[6] The only other section which dealt with employees was s 8. That section authorised the Board to appoint persons to certain specified senior positions and to appoint "all such other officers as it thinks necessary to assist in the execution of the provisions of this Act" and to pay them such salaries and allowances as the Board thought fit.

[7] Also relevant are the Tonga Telecommunications Commission Staff Regulations promulgated in January 1998. In so far as they dealt with the termination of the employment of employees, the Staff Regulations provided that the Board had a right to summarily dismiss or suspend an employee for serious misconduct: section 12.5.1. They also contained a section dealing with separation from service: section 13 which, in turn, provided a mechanism for a staff member to resign or retire on grounds of ill-health or age and, in relation to retirement, specified certain benefits payable to the staff member. A further provision relating to termination because of redundancy came into force in May 2000, after the appellant's dismissal.

[8] The primary judge concluded that s 10(d) conferred a power on the Board to dismiss an employee and that power could be exercised by dismissing an employee by giving reasonable notice. In the appeal, counsel for the appellant argues that the word "dismiss" should be treated as a reference to dismissal for misconduct in contrast to the word "termination" in s 10(e) which connotes a broader process including termination by giving notice. This construction, counsel submits, is fortified by the absence of any provision in the Staff Regulations dealing with dismissal on notice and the inclusion of the provision dealing with summary dismissal for serious misconduct.

[9] We are satisfied that s 10(d) did confer a power on the Commission to dismiss an employee by giving the employee reasonable notice. It should be noted that in the Act there was a distinction, of a type often found in public sector employment, drawn between officers and staff. Having regard to the terms of s 8, officers appeared to be employees of the Commission who held senior managerial positions. This distinction was not the subject of submissions in this appeal, but it is probable that the appellant was an officer. However it is unlikely anything turns on this point, as the power to dismiss (whatever that may have comprehended) was said to arise in relation to both officers and staff.

[10] The word "dismiss" does not have a fixed meaning. However in the context of employment, it can mean dismiss either summarily for cause or by giving notice or payment of wages in lieu. This issue arose in Auckland Transport Board v Nunes [1952] NZLR 412. An Appeal Board was constituted to hear and determine appeals from dismissals. An employee had been dismissed and given a week's pay. He sought to appeal to the Board against his dismissal. The employer argued that the Board did not have jurisdiction as the word "dismissal" meant wrongful dismissal. The Court rejected this argument. Fair J noted that the word was frequently used to cover dispensing with the services of a servant by a lawful notice putting an end to his employment, providing, as an example, the judgment of Neville J in Konski v Peet [1915] 1 Ch 530. Fair J said at 415:

According to Webster, "to dismiss" is to "send or remove from office, service or employment; discharge"

It would appear, therefore, that the word "dismissal" may be used in the sense of either a peremptory or arbitrary dismissal or a dismissal after due notice or payment under the terms of the contract of employment.

[11] A similar view was expressed in a more recent decision by Williamson J in Wellington Clerical Union v Greenwich [1983] ACJ 965 at 973. His Honour took the view that the word "dismissal" is "a word with a wide meaning. It should not be construed narrowly..... A dismissal is a "sending apart" or a "sending away" or "sending forth"". His Honour traced the meaning of the word through sources from the Bible to Court practices concluding that the most appropriate definition was in the ILO Convention concerning the Termination of Employment namely "the termination of employment at the initiative of the employer" which his Honour noted covered dismissal both upon and without notice, and dismissal both actual and constructive.

[12] The use of the word in this wider sense can also be illustrated by a passage in Halsbury's Laws of England (4th edition) Vol 16 at para 276:

276. Termination of employment; in general. Employment may in general be terminated at common law either by dismissal or by resignation. If it is terminated by dismissal, that dismissal may at common law be either lawful or wrongful; and a dismissal, whether lawful or wrongful, may be challenged as being unfair by statute.

[13] It can be seen that the learned authors speak of lawful dismissal and a little later in the text, there is a section commencing at paragraph 288 under the general heading "DISMISSAL ON NOTICE" which discusses the termination of the employment relationship by the employer giving notice of termination. In this context, the word "dismissal" is used to comprehend lawful dismissal which includes both dismissal for cause (misconduct) and dismissal by giving notice.

[14] Plainly the meaning of a word is influenced by context. However it is improbable, in our view, that Parliament intended that the power conferred by s 10(d) on the Commission to "dismiss" officers and staff was constrained and limited to dismissal for cause. It is more probable that it was intended to be an unconstrained power in the same way that the power to engage or employ was unconstrained save that at least those powers arose only when the Commission deemed it necessary for the conduct of its business. It is unnecessary to determine whether the words "necessary for the conduct of its business" qualified all the powers identified in s 10(d). It is arguable that they qualified only the power to engage or employ. However, even if this is so, it would be curious if the power to engage an employee was to be measured by reference to what was thought to be necessary for the conduct of the Commission's business but if the needs of the Commission's business changed, there was no power to dismiss on notice. For example, in periods of expansion and growth the needs of the Commission's business might well have required officers and staff to be engaged or employed. However, on the appellant's argument, in periods of contraction when less officers or staff might be necessary, the Commission could not dismiss them.

[15] The appellant points to the use of the word "termination" in s 10(e) and submits this word comprehended a wider notion of termination by the employer and suggests some narrow use of the word "dismiss" in the preceding paragraph. However the word "termination" arose in a context where the Commission was empowered to provide benefits in certain circumstances. But if the Commission had had no power to dismiss or terminate on notice then there would have been no point in providing a power to provide benefits on "termination" if that word had comprehended some wider notion of dismissal including termination on notice.

[16] Counsel for the appellant referred to the judgment of the House of Lords in McClelland v Northern Ireland General Health Services Board [1957] 1 WLR 594. In that case, the written conditions of employment made provision for dismissal for gross misconduct, inefficiency or unfitness. The Court, by a majority, concluded that this written provision should be taken to have exhaustively stated the basis on which an employee could be dismissed. Accordingly, an employee could not be dismissed on notice. However, in the present case, while the Staff Regulations make provision for dismissal in only certain circumstances, they cannot derogate from the powers conferred by the Act itself. It would be inappropriate to proceed on the basis that the right to dismiss conferred by the Act would not be one of the implied terms of the appellant's contract of employment. In our opinion, it was.

[17] As we have already indicated, we reject the construction of the word "dismiss" advanced by the appellant. In our opinion, Andrew J was correct in concluding that the Commission could dismiss the appellant by giving reasonable notice. Accordingly, the way his Honour went about calculating the damages by reference to what was a reasonable period of notice, was correct. The appellant conceded that if we were to reach this conclusion it was unnecessary for us to consider his second argument, namely that the damages should have been calculated by reference to the salary of the General Manager.

[18] The appeal should be dismissed. On the question of costs, we consider that each party should pay their own costs. The issue of whether the Commission could terminate employment on reasonable notice involved the Corporation resiling from the concession that had been made in the earlier proceedings in the Court of Appeal noted earlier in these reasons. On one view, the Corporation should not have been allowed to conduct yet another aspect of this protracted litigation on a different footing to that adopted earlier in the litigation. Apparently, however, it was allowed to do so or the question did not arise. However we consider that, in all the circumstances, the fair and appropriate costs order is as we have just indicated.

[19] We conclude by noting one matter. In his judgment of 14 December 2007, Andrew J declared that the appellant was entitled to continue to be paid his pension at the rate of $13,862. There was no cross appeal against this aspect of his Honour's judgment. However given the protracted litigation and the inability of the parties to settle it by agreement, we sought to clarify the position by asking counsel for the Corporation to indicate that it accepted it had an obligation to pay the pension and would pay it. Counsel indicated that his client accepted it had an obligation to pay the pension to the appellant and would pay it. This is important. Were it the case that no pension was to be paid in the future, then it would be almost certain that the appropriate damages would be considerably more, by a significant margin, than the damages determined by Andrew J.