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Hnaloane v Pentecost Pacific SA [1984] VULawRp 10; [1980-1994] Van LR 94 (11 May 1984)

[1980-1994] Van LR 94

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU

CIVIL JURISDICTION

Civil Case No. 213 of 1983

BETWEEN:

PALENE HNALOANE
Plaintiff

AND:

PENTECOST PACIFIC S.A.
First Defendant

AND:

MONSIEUR PHILIPPE PENTECOST
Second Defendant

Coram: Chief Justice Cooke

JUDGMENT

[CONTRACT - EMPLOYMENT - DAMAGES - breach of contract]

The Plaintiff in this case was employed by Burns Philp and Vanuatu Motors from 23rd April 1974. He performed his duties with the said two Companies in an exemplary manner. He was contacted by Mr Leny, a director in Pentecost Pacific, on behalf of the said Company and he organised a meeting with Jean-Marie Callewaert, Manager of Pentecost Pacific, Philippe Pentecost, the second Defendant and the Plaintiff at the Intercontinental Hotel. The Plaintiff gave evidence that there were several discussions. He said it was made clear to him that the first Defendant Company required someone with good public relations to promote the sales of Datsun cars. Further, that the second Defendant was of Melanesian origin and part of his clan or tribe. He said that in spite of the fact that he had been promoted in Burns Philp, he decided to forgo promotion and accept employment with the first Defendant Company to assist the said company in the improvement of its sales of cars. He stated there were five factors that helped make his decision:-

1. That his professional competency had been established.
2. That there was common origin between him and the second defendant.
3. That he had good contact in Vanuatu both in political and economical fields.
4. That he was New Caledonian in origin.
5. That he was promised advancement in the Company.

He stated that the second Defendant promised him good prospects in his Company both here and in New Caledonia. He stated that when the terms and conditions of the contract were finalised at the Intercontinental, Mr Guyette Wahea was present. That the verbal terms agreed were:

1. Contract was to be for five years.
2. That he be given a Company car.
3. Possibility of promotion in the Company. He said the second Defendant gave him an assurance that the verbal agreement reached would stand.

At the meeting five were present. The second Defendant, the Plaintiff, Mr Guyette Wahea, Mr Leny and Jean-Marie Callewaert. The Plaintiff stated that he remembers very well informing the second Defendant at the meeting that he was sacrificing a career of eight years with Burns Philp to assist him (the second Defendant) in his enterprise.

He said that later when he received the letter of engagement in the presence of Mr Leny and Mr Jean-Marie Callewaert but in the absence of the second Defendant, he noticed the duration of the contract and possibility of promotion within the Company were not included and that he immediately drew the attention of Mr Callewaert to this. That Mr Callewaert has replied that those elements of the contract had been verbally agreed but were the responsibility of the second Defendant. He said he did mention these exclusions on a few occasions when the second Defendant came to Vila but he asked Mr Callewaert to approach the second Defendant about the omissions since he, Mr Callewaert, is the first Defendant's director.

On the 3rd June 1983, the Plaintiff said he was called by Mr Callewaert to the office of the Company. Present were Mr Ian Smith, the head accountant, and Mr and Mrs Kovacs were present. He was given a letter by Mr Smith dismissing him. That Mr Smith explained that Pentecost Pacific S.A. stopped activities as from that day and that is the reason why his employment was terminated. He said he opposed the payment in lieu of notice given him since the second Defendant assured him that the duration of the contract was five years and also the possibility of promotion. That he tried to get in touch with the second Defendant about a week after dismissal and did so through Mr Barak Sope who had told him that he discussed the matter with the second Defendant and he confirmed the contract was for five years.

The Plaintiff was asked many questions by Mr Hudson, Counsel for the Defendants but throughout his evidence indicated that he had absolute trust in the second Defendant and that as he had promised him a five year contract, he was satisfied he would be engaged for that period even though that period was omitted in the letter of employment.

I paid particular attention to the demeanour of this witness when he gave evidence and was impressed by the manner in which he gave his evidence. Yes, there were matters he could not explain but he submitted such were due to the Melanesian relationship between himself and the second Defendant and the absolute trust that he would employ him for five years as verbally agreed at the Intercontinental. In the end I accepted him as a witness of the truth.

Mr Barak Sope gave evidence for the Plaintiff and stated that he got in contact with the second Defendant when the Plaintiff informed him that he had been dismissed. That he phoned the second Defendant without success so sent a letter to the second Defendant to come to Vila. That second Defendant came to Vila and he had a meeting with him on 4th August 1983 in his office. That two points were discussed - one a custom ceremony that took place at the Cultural Centre when the Plaintiff was employed by the Defendants and secondly that he raised the question of the employment of the Plaintiff for five years. That the second Defendant admitted that he engaged him for five years but it was not in the written contract. That the second Defendant mentioned that he had engaged the Plaintiff for five years many times. He said he asked him that question many times as he wanted to be sure and the second Defendant confirmed that he did engage him for five years. I could see no reason but to accept his evidence as the truth.

Mr Callewaert then gave evidence and stated he was at the meeting at the Intercontinental Hotel. He was asked by Mr Hudson, Counsel for the Defendants - "Was anything said about a five or six year employment for the Plaintiff?" The reply was - "The Plaintiff informed the second Defendant that he would not engage himself for more than five years after that period he might return to New Caledonia." A five year period was certainly mentioned by the Plaintiff. One would think that if the period was to be less than such the Second Defendant would have clearly indicated to the Plaintiff that such period was not possible or words to that effect. This witness did not prepare the letter of employment of the Plaintiff but did say that the Plaintiff made no comment when he signed the letter but a month later that the plaintiff inquired about his period of five years and said he would get in touch with the Second Defendant and see him about the duration of the contract. When asked by the Counsel for the Defendants how many times did the Plaintiff ask him about the five years being put in the contract, the witness replied that the Plaintiff has asked him at least two to three times. That he, the witness, replied to the Plaintiff that he should settle the matter with the second Defendant himself. He later said he was present in the office of Mr Sope when the second Defendant was there but he was not sure of what they discussed as he understood only simple English and that he was only there to accompany the second Defendant.

Mr Guyette Wahea then gave evidence and said that shortly after Independence all car dealers were competing for a reduced market. That the Defendant Company suffered severe hardship in relation to a Company like Vanuatu Motors. That in order to prove efficiency, the second Defendant approached him through Mr Callewaert to negotiate with him the employment of the Plaintiff as Sales manager of the Defendant Company. That he (the witness) has a family link with the Plaintiff. That he and the Plaintiff hesitated about the proposal put to them until 27th July at 7.30 P.M. when a meeting took place in the lobby of the Intercontinental Hotel. At the meeting was the Plaintiff, second Defendant, Mr Callewaert and the witness. The witness said "After discussion between us an informal agreement was reached. This agreement took into consideration salary, company car and what made the Plaintiff and myself agree was that it contained potential working future for the Plaintiff in New Caledonia. To start with, we agreed with the second Defendant that the period would be for five years." He said he saw the letter of agreement and that it did not contain the five years employment. That he himself contacted Mr Callewaert and told him that the period of five years had to be mentioned in the letter. That Mr Callewaert said - "In this respect, you have to see the second Defendant." He said he acted as agent between the Plaintiff and the second Defendant because of family ties with the second Defendant. That the second Defendant's grandmother comes from his tribe and village in New Caledonia and according to custom, she belongs to his clan. He said that the second Defendant's father financed his studies and that he deeply regretted that he was called to Court in respect of a dispute with his son (second Defendant). The witness said that ten minutes after his dismissal the Plaintiff mentioned his reaction as being 'stunned and taken aback'. The witness said he even looked 'pale'. The witness related under a long cross examination by Mr Hudson, Counsel for the Defendants, that the purpose of the custom meeting was to have the second Defendant recognised by custom representatives and to be recognised in a custom role and economic capacity. In relation to the duration of the contract, he said that it was the second Defendant who offered the five year contract. He said the second Defendant said - "New Caledonia has an important part to play. You can work here for five years and then go to New Caledonia." Later he said after the Plaintiff was dismissed he had a meeting with the Plaintiff and second Defendant at the Intercontinental Hotel. "We talked about dismissal of the Plaintiff. I said (witness) 'The Plaintiff was meant to work for five years.' The second Defendant then said he deeply regretted the situation and that he would go and see Mr Kovacs." That the second Defendant did confirm that the contract was for five years. Also that the second Defendant confirmed that he agreed to five years during the meeting on 27th July 1982. This witness also said that when the Plaintiff signed the letter and showed it to him, he (the witness) noted that the five years was not contained in it, that he called the second Defendant in Noumea and asked him why the five years was not mentioned. That the second Defendant replied - "Do not worry about that, we will see to it later." Mr Hudson, towards the end of the evidence of this witness quite improperly referred to a conviction of this witness which caused the witness to be completely upset. It was improper of Mr Hudson to introduce such. The witness admittedly was convicted of a charge of fraud but an appeal was pending which rendered the matter 'sub judice'. I disregard completely the file submitted by Mr Hudson and the questions he asked the witness in relation thereto. Throughout his evidence this witness to whom I paid particular attention, as he was a key witness, answered his questions without hesitation. There were suggested answers he did not agree with but all his evidence was given in a calm manner. I was impressed with his total demeanour and I accepted him as a witness of the truth.

There was placed before the Court, in the preliminary proceedings and before Vanua Navigation Limited were dismissed from this action, a deed made the 1st June 1983 between Vanua Navigation Limited and the second Defendant. Clause 3 of the deed states:-

"Mr Pentecost (the second Defendant) acknowledges that Pentecost Pacific S.A. (the first Defendant) will take all necessary steps to dismiss all its employees in Vanuatu prior to commencement of business by the Company. Mr Pentecost covenants that Pentecost Pacific S.A. and he personally shall jointly and severally indemnify and keep indemnified the Company against all manner of actions, suits, claims, costs, disbursements and demands whatsoever under any system of law which may arise as a result of the dismissal of all or any of its employees by Pentecost Pacific S.A. or which may arise from the prior employment of all or any of the said employees by Pentecost Pacific S.A."

It is clear from this clause of the deed that the second Defendant was committed to agree to the dismissal of the Plaintiff prior to the new Company taking over the business but he accepted responsibility for doing so.

The second Defendant then gave evidence. He did concede that he and the first Defendant did engage the Plaintiff to develop the commercial sales of cars within the Company. That he controlled the Company as Managing Director. He agreed there was a meeting at the Intercontinental but stated there was no agreement as to the duration of the contract. He said that he did mention that period of five years would be feasible and was asked what he meant by that - He replied: "When one employs someone new one expects that person to stay as long as possible with the Company, otherwise what is the use of him being employed." This is the very point that the Plaintiff made in his case, that he would not have left his previous employment unless he was assured of continuous employment for a certain period of time. The witness said he never employed anyone for a fixed period of time. He denied Mr Guyette Wahea spoke to him on the phone about the duration of the contract. He was asked "Did the Plaintiff raise an objection with you about the contract?" He replied "Not at all." He went on to say - "He could have done so in writing at the time of the contract and then we could have possibly amended conditions of the contract." The witness seemed to infer here that if the duration had been raised, the contract could have been amended to contain the five years period. It certainly was a statement favourable to the Plaintiff's contention as to duration.

The second Defendant did not agree with the witnesses for the Plaintiff that a real custom ceremony took place. He considered what took place was a mere introduction of the Japanese representative from Datsun Motors. The question of custom was referred to by at least three witnesses whom I believed. The ceremony could have also been used to introduce a representative of the Datsun firm. He said he did receive a telex from Mr Barak Sope and such telex was exhibited as Exhibit D2 in which Mr Sope mentioned the five year period but the second Defendant in his reply never referred to such. One would have thought that if no such period was ever agreed, this witness (second Defendant) would have categorically so stated to Mr Sope in his reply telex (Exhibit D3). He denied that Mr Sope mentioned that the Plaintiff had a five year contract. It is a question of belief and as no possible reason was suggested why Mr Sope should lie, and having listened carefully to his evidence when given, I accepted his evidence as the truth of what took place. Indeed his telex to the second Defendant confirms his evidence that five years duration was mentioned. The witness (second Defendant) agrees that his grandmother was an extract Melanesian and that his father was a mixed race Melanesian. The evidence of this witness was nothing but denials. Again I took particular notice of the demeanour of the witness when he gave evidence. I formed the impression that he did not tell the whole truth of the events which happened. In the end, I was of the opinion that his evidence could not be accepted as the truth and did not accept it as such.

I am satisfied from the evidence that a five year contract was agreed between the Plaintiff and the Defendants. The terms of the contract were in fact agreed at the Intercontinental Hotel and all that remained was to put the same into writing. As I am satisfied that there was an agreement for five years, such, if not incorporated in the contract, may be implied. Under section 15 of the Employment Act No. 1 of 1983 which came into force on the 30th May 1983 and covered all contracts in force at the date of the commencement of the Act (section 80), section 15 states:-

"The maximum duration of employment that may be stipulated or implied in any contract shall in no case exceed three years."

Even though the Plaintiff claims that the contract was for five years and I accept his evidence and that of his witness that it was for five years, he is bound by the Employment Act and can only claim a maximum of three years.

An interesting point arises as to the correct meaning of the French word "rupture" as it appears in the letter of employment. From authorities it would seem that if the employee was ending the contract he would use the word "rupture" but in a case where the employer is ending the contract the words "rupture et résiliation" should have been included in the contract. An awkward query may arise on the interpretation of words but I am satisfied on the evidence that a five year period was agreed and such being the case, section 48 of the Employment Act applies, i.e. "A contract of employment shall terminate on the last day of the period agreed in the contract." This I read to mean that the contract shall continue to the end of the agreed period. That being the case, the Defendant was in breach in ending the contract as he did. In my opinion, the Plaintiff is entitled to salary and all entitlements for a period of three years. Any money already paid for any period of the said three years to be deducted. It is also my opinion that the manner in which the Plaintiff was dismissed was quite despicable. Further, no consideration or thought seemingly, was given to the fact that the Plaintiff sacrificed a lot when he left Burns Philp to work for the Defendants. In my opinion, he is entitled to the damages claimed and I so Order.

Judgment is entered for the Plaintiff as set out with costs. At the commencement of the trial and as a result of a submission by Mr Coombe for Vanua Navigation Limited, I dismissed the said Company from the trial and gave costs against the Plaintiff. After further consideration I reverse that order and order that the first and second Defendants pay the costs of Vanua Navigation Limited and not the Plaintiff.

11 May 1984

FREDERICK G. COOKE
CHIEF JUSTICE

[Editorial Note: This matter went on appeal and is reported as Pentecost Pacific Ltd v Hnaloane; CA 4A/84]