>
Upon thentiff claim the
defendant in their defence filed a set off and counter claim of whichwhich the
action is as follows:-
“That during the plaintiff employment with the defendant he committed
various breached in his fiduciary duties between
himself and the defendant,
those are for improper use of suspense account, improper operation of staff
loans, reinstatement
of staff allegedly guilty of misconduct, that is
Estella Tabi and Peter Sakita, improper loan to Board members and authorised
overdrawing of saving account. And the defendant claims for Damage to be
assessed and interests.”
ass="Mss="MsoNormal" style="margin-top: 1; margin-bottom: 1">
APPOINTMENT
The plaintiff was appointed the General Manager of the National Bank of Vanuatu and was in employment
from trom the 2nd April 1997 to the 26th May 1998. As
General Manager he was the Chief Executive Officer of the National Bank of
Vanuatu. His power, duties and
responsibilities were governed by the said
act and other rules and in addition the contractual condition. The
appointment
of the plaintiff was not challenged, in any way and remains
proper.
Both parties endorsed h contract of employment on the 4th April 1997, under Clause 1.1,
for a or a term of 5 years. Under the contract of employment the Board had power
to amend
the contract of employment or terminate or cancel. By the Board
meeting of 13th June 1997 decided to amend his contract of
employment to include Clause 6.3(b) on 12 months remuneration as settlement
on termination including termination under Clause 6.2 by the employer or the
plaintiff himself.
Issues
lass="MsoNoMsoNormal" style="text-indent: -20.25pt; margin-left: 40.5pt; margin-top: 1; margin-bottom: 1">
1. p;
span>Mpan>Ministenister’s power in law and by contract to terminate the plaintiff.
lass="MsoNoMsoNormal" style="text-indent: -20.25pt; margin-left: 40.5pt; margin-top: 1; margin-bottom: 1">
2. nbsp; p;
s Naan>National Bank of Vanuatu administrative management power to terminate
the contract.
3.
;
Whether the Contract between the plaintiff and defendant made against
the National Bank of Vanuatu Act
&nb"> &nnbsp;
Ipan>Is Claus) 6(3)(b) of the contract of employment was a penalty
condition, was unjust or/and unconscionable.
Issue No. 1. Minister’s Power
to Terminatan>0pt">.
The letter by the Minister of
the 26th s a termination letter. There is no point going
arounaround the letter as it was precise and clear, which read in part:-
"… your employment with the
National Bank of
Vanuatu is to be terminated … please treat this letter as formal notice that
your employment with the Bank is terminated
with effect from Tuesday 26th
May 1998."
Hurley for the defendant
advances that, the termination was made according to law, while Hakwa
advances that the termination
was against the terms of the contract. On the
basis of this advancement, I look at the term of the contract on
termination.
Clause 6(1) of the contract
gives the power to the National Bank of Vanuatu (or in this case the N.B.V.
Board) to terminate
the plaintiff on the grounds as set out in clause 6(1)
(a) to (f).
lass="MsoNoMsoNormal" style="text-indent: -18.0pt; margin-left: 54.0pt; margin-top: 1; margin-bottom: 1">
a) &nbs; &nbbsp;&
p;
Fpan>For bankrupt and arrangement with or arrangement for the benefit of
the creditor;
b) & p;
Gpan>Guilty of misconduct;
c) & p;
Dpan>Disobey lawful order of board of Director;
d) ;
Ccurt convictnviction;
e)
Disability and incapable to perform his duties for three consecutive
months in one year;
<f) ;&nbssp;
sp;
If he breaches any other term of the contract itself.
&pt"> nbsp;
The evidence was quite clear,
that of the grounds above was committed by the plaintiff for
r
termination of his contract
pursuant to Clause 6(1) by the minister.
However, apart from the contractual power of termination, were there any
other
statutory provisions in law for termination? Firstly, to look at the
N.B.V. Act of 1989 Section 21 be the relevant provision
which s. 21(1)
states:-
"The General Manager shall
be a person of recognised experience in banking, business, financial on
professional matters
and shall be appointed by the Minister after
consultation with the Board for a period of not more than five years."
The above provision gives power
to the Minister to appoint any person qualifieer Section 21(1) for any
ny
period between
1 day to 5 years. Section 21(1) should not be read as fixed
term of 5 years but any period within 5 years and not more, unless
renew.
The court accepts that by virtue of his appointment he was to be employed
for a period of five years, unless any
shorter period was expressly
provided. The new amended Section 21 of 31st of July 1998 reads:-
"The Prime Minister after
consultation with the Minister a the recommendation of the the Board will
appoint a Managing
Director who must be a person with not less then 5 years
experience in banking business or financial matters and hold a relative
university degree or similar qualifications."
The N.B.V. Act of 1989, where
the plaintiff was appointed under, did not refer to university degree, where
as the amendment
provisions of 1998 included such qualification.
Further, in the old section 21,
the power of terminatis silent, while in the amended section includes
termitermination.
New section 21(7) states:-
"twithstanding anything in
this or any other Act the Managing Director will be entitletitled to 3 months
salary in
lieu of notice of termination and any contractual obligation to
the contrary shall have no effect."
class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
This amendmene into force
on the 31st July 1998 after the termination of the plaintiff tiff
appointment and the plaintiff's contract of employment signed before
the
amended section 211). The old section 21 did not provide the power of
termination in addition to appointment. However,
to take an outside
assistant in giving effect to s. 21 of the N.B.V. Act, then only the
Interpretation Act will be the general applicable law that can be of some
assistance in situation where no power of termination provided for in
an Act
of Parliament, not to Constitutional provisions. The mandate of the
Interpretation Act CAP. 132 are to provide for the interpretation and
construction of Act of Parliament, subsidiary legislation, other laws and
documents. The applications of the said Act under Section 1 are for general
application which Section 1 states:-
"Subject to the provision of
this Section, this Act shall apply for the construction and interpretation
of:
class="MsoNoMsoNormal" style="text-indent: -18.0pt; margin-left: 72.0pt; margin-top: 1; margin-bottom: 1">
a) &nsp; & p;
p;
Apan>Acts of Parliament …;
b) & p;
…pan>…;
c)
/ …panspa>/p>
/p>
"
However Section 1(2) places the
restriction of the provision of the Interpron Act that to apply which hich
states:-
lass="MsoNoMsoNormal" style="margin-left: 36.0pt; margin-top: 1; margin-bottom: 1">
"2) Where
a)
ie is sspreproy provided that the Act or any of its provisions shall
not apply or
">
b) &nbbsp;&
Tpan>There is something in the subject or context inconsistent with the
application of this Act or any provision hereof, this
Act or the provision
as the case may be shall not apply.”
ass="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
With the application of the
Interpretation Act, the National Bank of Vanuat quite needed the
op operation of the provision of the said Act to apply to its power of
termination prior to the 31st July 1998 amendment with the
restriction therein. I find that this is the best alternative in law to
assist and to be
read together with Section 21 of the N.B.V. Act as a
general application for adaptation and constructing purpose, where there
is
vacuum as to power of termination. I find nothing wrong to apply the
provisions of the Interpretation Act, a law in this jurisdiction, into the
National Bank of Vanuatu Act. Further, with inherent jurisdiction under
section 29(2) of the Court Act, to apply such law for adaptation and
construction
to complete the legal requirement on the power of termination
under Section 21 of the said Act. Section 21 of the Interpretation Act
reads:-
"Where an Act of Parliament
confers powers on any authority to m to make any appointment, that authority
shall also have
power (subject to any limitation on qualification, which
affect the power of appointment) to remove, suspend, reappoint or
reinstate
any person appointed in the exercise of the power."
I accept that the Minihas
the power under section 21 of N.B.V. Act to terminate a General Manager of
the National
Bank of Vanuatu in accordance with requirement under the N.B.V.
Act and particularly to responsibilities under s.21, in the
same manner that
he appoints. To do this, the Minister is to consult the N.B.V. Board before
terminating a General Manager.
Nevertheless, if there were no other
provision of the law e.g. Section 21 of the Interpretation Act, than the
contract clause 9 where it authorised the Board to terminate the General
Manager will apply.
Therefore, the Minister under
Sectioof the N.B.V. Act has the power to appoint the General Mana Manager
and under Section
21 of the Interpretation Act has power to terminate
according to law, law herein, be the provisions of the N.B.V. Act relating
to his responsibilities
or upon his contract. The letter of the 26th
May 1998 was a termination letter by the Minister within his power to do so
and that termination was proper in law based
upon the internal arrangement
between the plaintiff and the minister and amount to early termination of
his employment.
Second Issu.B.V.
administration power to terminate the plaintiffntiff’s contract.
The administration does not
have aner under Section 21 to terminate the plaintiff upon the
e
contract. Neither the
Act gave them power to terminate the GM or by
contract.
<
The letter of the 27th
of May 1998 was an administrative approach taken by the administration in
accordance with the Minister's letter of termination
of the 26th
May 1997. I do not regard Philip Tremethick letter as a termination letter
at all but a letter of action of entitlement
payable to the plaintiff on
termination, which is an administrative matter.
Third Issue – Whether the
Contract between the plaintiff and thendant made against the N.Be N.B.V. Act
class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
The defendant employed the
plaintiff for a period of 5 years with the adnal contract. The contract ract
of employment
entered to between the plaintiff and the defendant was in
compliance with section 21 of the N.B.V. Act and was not wrong, so
long as
the parties are comfortable with the conditions. The additional contract of
employment was binding and remains
enforceable contract by either party.
This means, under the contract where the N.B.V. Act cannot remedy a right
under
the Act than the provision of the Employment Act can come into play,
which in my view was sensible and within the law and govern by law in the
interest of both parties.
The amendment Act No.46 of 1998 was in my view a
direct result of the problem face in this case on additional contractual
obligations and qualification standards encountered, and amount to make him
redundant on the job as General Manager, because
of the Comprehensive
Reform Program taking place at that time.
Section 21 of the 31st
July 1998 (Amend allows contract to include 3 months salary in lieu of
notice of termination only and any contract
made to the contrary be of no
effect. This did not apply to the plaintiff contract of employment, but only
to any contract
entered after the amendment of the 31st of July
1998.
I find the contract entered
between the parties was made in dance with the N.B.V. Act aAct and the
Employment Act and proper.
Fourth Issue - Whether Clause
6.3 (b) a pe condition, is unjust and/or unconscionable<
There were two clauses of
6.3(b) and refer to as the old Clauseb) effective on the 4tsup>th
April 1997 and the new Clause 6.3(b) as approved by the Board on the 13th
June 1997 in amending the old Clause 6.3(b).
The new Clause 6.3(b) was some
how a new clause as not given to otrevious General Manager. Thr. The new
contract 6.3(b)
to include a "reasonable and amicable calculated
settlement to compensate for the remaining period of his contract of
employment". The Board meeting of the 4th of April 1997
deferred the new Clause 6(3)(b), as it creates no certainty for both parties
for what to be paid to the
plaintiff if he was terminated prematurely.
Because of this, the Board authorized the Chairman to attend to the amended
Clause in the contract of employment. It was deferred for the Board to seek
legal advice on the amendment.
Thting of the Board of the
13th June 1997 did receive legal advice on the nehe new Clause 6.3(b)
which the Board was advised that 12 months salary in lieu
of termination
would be a certain amount as the previous one was too wide. In other way the
Board had sought legal advice
before the Board made the decision.
After the advice, and after
fu deliberation on Clause 6.3(b), the Board agreed to the amee amendment by
resolution of
13th June 1997, to include the amended Clause
6.3(b), which referred to twelve months remuneration, as part of the
contract
of employment. With Clause 6.3(d), allow the plaintiff not to lodge
any claims if Clause 6.3(a) and 6.3(b) are settled.
lass="MsoBoMsoBodyText" align="left" style="text-align: left; margin-top: 1; margin-bottom: 1">
I
find that the inclusion of the new ClausClause 6.3(b) was done in accordance with
the power of the Board, after the
Board sought legal advice and made the
resolution. Not only that, at least the advice given to the Board member was
also
to cover early termination for political reasons or change of
government. So in fact the Board was quite aware and took this
approach if
his termination was premature.
Hurley advances that the plaintiff knew very well that he would be terminated earlier due to the
C.R.P. prog program, making
the plaintiff not to qualify for the post.
<
In view of the above
submission, the plaintiff admitted in examination in chief, that while he
was working with the bank
and work with A.D.B. consultant, he knew that an
expatriate would be recruited. Furthermore, in May 1997, after he was
employed in April as General Manager, he was aware of the C.R.P. policy. And
was aware of the report was table by the Committee.
In the meeting of the 13th
June 1997, where his contract 6.3(b) was aed, the plaintiff agreed thed that
he was ready to leave when a professional
banker is appointed to take over
from him.
So in actual fact the plaintiff
knew very well that he would be replaced. Not only that, by the Board
meeting of the 12th June 1997 the Board member too were quite
aware, and expressed by the Chairman, in that meeting: "The General
Manager is secured in his contract." Even at that meeting the advice
given to the Board was for some form of settlement for early termination, to
compensate
the plaintiff. This was entirely a matter within the province of
the board to make decision upon.
Hurley advances too that the
amended Clause 6.3(b) was unjust i>unconscionable and itnd it is
a penalty as the plaintiff was entitled only to Clause 6.2
entitlements, that is 3 months salary from notice of termination. Hakwa
submitted that for the Court to decide whether the amended Clause 6.3(b) was
unjust and/or unconscionable and a penalty,
the Court must find first
whether or not the plaintiff knew before he entered into contract with the
bank, or in addition
when employed by the defendant that his term will be
terminated earlier than 5 years.
On the advancements, Clause
6.1, and Clause 6.2 of the contract of employment gave powethe Board to
terminatminate the
plaintiff for reasons as stated there in. If termination by
the Board or the Minister under section 21 of the Interpretation Act,
occurred before the five years term is over than the entitlement under
Clauses 6.2 and 6.3(b) of the contract will apply
to the plaintiff. Whether
the Minister or the Board terminates his employment Clause 6.3(b) will apply
equally to both
actions, as both powers refer to one thing, and that is,
termination prematurely. His employment was a mater entirely for the
minister and the board and he should not be dragged in, as his status
remains an employee. The court accept that on appointment
the minister was
satisfied that the plaintiff has satisfies the requirement of s. 21 of the
N.B.V. Act of 1989. As the
responsibility was impose on the minister and the
board to make such decision and not upon the plaintiff.
There is no evidence to prove
that the plaintiff had any evil kdge to get the post, than shan set up
Clause 6.(3)(b) to
claim entitlement to his advantage. By the case, Civil
Appeal Case No. 2 of 1997 between DINH VAN THAN AND THE MINISTER OF FINANCE
which the court stated that “the power of appointment to this Board is
for a term of three years. It is clear that Parliament intends that person
will
continue to serve for the whole of the term”. The court was giving
meaning to section 3 of the V.N.P.F Act on appointment of members to the
Board as members and chairman.
Where section 3 of that Act only gave power
to the minister to appoint for a term of three years and only to declare the
members sit vacant under s.3(3). As in the case before me, s.21 of the N.B.V.
Act gave power to the minister to appoint
only, and applying the finding in
the above case, the term of employment of the plaintiff was for a term of
five years,
reflecting the very intention of Parliament in the N.B.V. Act
for his appointment to run for five years.
In early termination the
arrangement between the minister and the plaintiff or the minister
beforbefore terminating the
plaintiff, the plaintiff will have to agree to forgo
his entitlement under clause 6.2 and 6.3 and will be posted to another
position within the Government sector. On this arrangement, the plaintiff
was paid the Clause 6.2 entitlement, and that
is three months payment in
lieu of notice on termination. Neither he was ever posted to a position on
termination. One
of the position offered to him, was appointment to U.N. as
an ambassador, which did not occurred. However, on the 2nd
November 1998, after termination on the 26th May 1998, about 5
months 6 days after, he was appointed as chairman of Van Air. This clearly a
breach of their agreement
for the termination of the plaintiff to be posted
within the government sector. I accepted this as a form of transits
revocation of appointment as General Manager and for his immediate
appointment to any position within the government sector
as continuity of
employment in accordance with their arrangement. The minister’s letter of
the 26th May 1998 which read in paragraph 3, “you will receive
three (3) months salary as final payment”, will justify the fact that
the plaintiff will be paid his Clause 6.2 entitlement and continue
employment with the government
sector right on termination. If this did
occurred, the Clause 6.3 entitlement would not apply as the plaintiff right
of employment will not be interrupted and will maintain the purpose of their
agreement in the continuity of employment. The
minister was not call to give
evidence to give any explanation of such agreement. On the basis of their
arrangement,
I accept that there was an agreement between the minister and
the plaintiff for the minister to terminate his employment with
the
defendant and for immediate employment with the government in maintaining
the continuity of his employment without
interruption. I find that the
minister, on behalf of the defendant, was in breach of such agreement, and
makes Clause
6.3(b) of the contract enforceable against the defendant. The
employment of the plaintiff as of the 2nd of November 1998, about
five months and six days after termination is evidence of fact of breach of
their agreement.
In principle the contract
Clause 6.3(b) was approved byBoard after having the benefit of legal
advise in amen amending
Clause 6.3(b) in approving 12 months remuneration for
early termination, as a fix amount instead of a reasonable and amicable
amount.
Hakwa submitted Section 18 of
thloyment Act, which reads:-
"(1) No sent such as
'rec 'rec in full settlement of all all claims' made by the employee, whether
during the period
of his contract or after its terminatioall have the
effect of waiving any rights he may have have under the said contract.
(2) accep
with without prut protest or reservation bion by an employee of a pay document shall not be
held to imply
renunciation on his part of the claim for all or any part of
remuneration which may be due to him and such acceptance shall
not be held
to imply the settlement of all claims."
What Hakwa submitted on the
basis of the above law, the defendant by the terms of the agreement
(6.3(b)), had the obligation
to pay the plaintiff for the remaining period
of 12 months. He further refers to Section 6 of the Employment Act too which
states:-
"Nothing in this Act shall
affect the operation of an, custom, award or agreemeneement which ensures
more favourable conditions
in any respect to the employees concerned than
those provided for in this Act."
class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
He also refers to Section 9 of
the same Act, which reads:-
class="MsoNormal" style="mle="margin-top: 1; margin-bottom: 1">
"A contract of employment
may be made in any form, whether written or oror oral."
ass="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
Further, he refe Section
15 of the Employment Act, which states:-
"The maximum duration of
emplo that may be stipulated or d or implied in any contract shall in no
case exceed 3 years."
The plaintiff’s contrf
employment was govern by law, and for a period of five years with the
contracntract in addition.
The additional written contract can be subject to s.
15 of the Employment Act with renewable.
He further, submitted that
Clause 9 o agreement shall be govern by and construed in accordance
nce
with the laws of the
Republic of Vanuatu including the provision of the
Employment Act.
Section 6 of the Employment Act
allows for additional conditions that are not coveredhe Employment Act.
Fu Further, Section 21(2) of the N.B.V. Act allows additional contract to be
entered in addition to the plaintiff's
term of employment.
In light of the terms of the
contract, the Employment Act s.6, s. 9 and s.21(2)he N.B.V. Act the
con contract was lawfully entered into by amendment of Clause 6.3(b). No hide
and seek in the amendment at all. The agreement went through the normal
process, legal advice sought and approved by the Board.
I find it was proper
and no reasons why the plaintiff was not entitled to his 12 months
remuneration in Clause 6.3(b)
for his early termination.
class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
On unjust and unconscionable,
that is, whether Clause 6.3(b) was unjust and unconscionable and whether 12
months remuneration
was unconscionable and excessive or contrary to justice,
and cannot be enforced against the defendant, Hurley referred to case
Lister v. Romford Ice & Cold Storage Company Ltd. [1956] UKHL 6; [1957] AC. 555.
referred to implied term in the contract to exercise reasonable care in
the exercise of duties. This in my view would address issues in the
counter claim by the defendant. However, if it does goes towards unjust and
unconscionable than at least at that time, the Minister of Finance should
have been advised to challenge the Board’s approval
for making the amendment
and can not be left to surface at the action by the plaintiff. I find that
there was a general
acceptance by the Minister for that amendment to be in
place. The resolution on the 13th June 1997 was quite clear and
precise.
I find that the Board had
greater benefit of legal advise, as it retain two legal firm at that time
before the meeting
of the 13th June 1997 where Clause 6.3(b) was
discussed and that the resolution was justly reached by the Board on behalf
of the
N.B.V. as a form of compensation for earlier termination of contract,
was not excessive but reasonable in contrast with his
remaining period of
employment if he was to continue on the job. At least the Board had a good
opportunity of assistance
as to decision-making and if they had sought legal
advice then the decision they arrived at was a good one.
Hurley advances that Clause
6.3(b) of his contract of service must fail because Clause ) is a
penalty clauselause. He
referred to the following cases to support his arguments:
Johnson v. Johnson [1989] 1 WLR, Dunlop Pneumatic Tyre Co. Ltd. v. New
Garage & Motor Co. Ltd. [1914] UKHL 1; [1915] AC 79, Cooden Engineering Co. Ltd. v.
Stanford [1953] 1 QB 86, Odea v. All State System (WA) Pty. Ltd. [1983] 152
CLR and, Australia Consolidate Investment Ltd. v. Bond Corporation Holding
Ltd. (unreported)
1st July 1993.
In Johnson v. Johnson -
“that one consequence of attitude of Court to penalty clause is that the
question whether a sum stipulated is a penalty or liquidated
damages is of
question of construction to be decided upon the terms and inherent
circumstances of each particular contract,
judge of as at time of making the
contract, not as of the time of breach.”
class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
And in the other case Odea
v. All State System (WA) Pty. Ltd. [1983] LR 359, at p. 400, whic>which
explains a sum whether is a penalty or a liquidated amount which Deou J.
states:-
“… Whether or not a
provision of a contract imposes a penalty must be determined by reference to
the true operation of
that provision. That provision must however be
determined as a question of substance which can be fore closed by statements
of the parties in their agreement, no matter how genuine they may be, or to
their intention in stipulating the sum …
If, however, that pre-estimate is
either extravagant (writing to have more money then he is allowed to) or
unconscionable
in amount in comparison with the greatest loss that could
concervasly be proved to have followed from the breached on judge
or at the
time of making the contract, is unconscionable in the burden which imposes
in the circumstances which have
… it is a penalty regardless of the
intention of the parties in making it.”
Hurley also advance that by
amendment of Section 21 of the N.B.V. Act of 31st July 1998 makes
the plaintiff not qualified for the job and secondly the plaintiff was
re-employed as Chairman of Vanair.
And that’s why the 12 months remuneration
under Clause 6.3(b) were extravagant and or unconscionable and amount to a
penalty. Hakwa submitted in applying the above case as submitted by Hurley
that is Johnson v. Johnson then the Court will have regards to; that
no evidence to show that the plaintiff knew that his contract will be short
or temporary; the Board did obtain legal advise before they approved the
contract (Clause 6.3(b)); the Board of Directors were
not influence, and no
evidence to prove that, the Board incorrectly approved the contract. He
submitted, all these shows
that Clause 6. 3 (b) cannot be a penalty or
amount to a penalty.
In light of these advancements
supported by cases and the evidence and the pplicable in this case, I
, I
find earlier
that the amended section 21 apply to contract made after the
effect of the amendment and did not affect the plaintiff contract
at all.
The plaintiff was appointed as General Manager of the defendant. By this
appointment the minister and the Board
were satisfied with the statutory
requirement of the repeal section s.21 that the plaintiff was employed under
and qualified
and the matter ends there.
In the meeting on the 13th>
June 1997 where the Board discussed at that time, that the Minister was
threathreatening to suspend the General Manager.
The new Clause 6.3(b) was then
resolved to include 12 months remuneration basically to compensate the
remaining period
of his contract, if there was an early termination of his
employment. Further, there was information known to the General Manager
and
even the Board of directors that the General Manager will have to go due to
the new amendment to Section 21 that
was in place to amend s.21 of the N.B.V.
Act of 1989. Therefore, in applying the principle in the Odea v. All
State Leasing System the true construction of Clause 6.3(b) was to
compensate the General Manager remaining period of his contract if there was
an early termination. If that amendment (which materialized on 31st
July 1998) was to upgrade the standard of qualification and experience of a
General Manager (which was not in the old
Section 21 of the N.B.V. Act of
1989) and to make him redundant then his term of appointment should not just
be dumped
away but he must be properly compensated for the remaining period,
and Clause 6.3(b) in my view was in place to protect the
interest of the
plaintiff. If the new law was to be the course of his early termination and
as a means of shortening
his statutory term of employment, then the law must
pay the price for its action, as the plaintiff only serve about one year
of
his five-year statutory employment. He was entitling in law and by contract
to be remunerated for early termination,
without being found guilty of any
misconduct. I find that the true construction of Clause 6.3(b) was
compensatory and
not intended to be a penalty clause against the defendant,
and the approach taken by the Board was sensible and just for any
early
termination of the plaintiff.
For all these reasons the
plaintiff is entitled to the ben under Clause 6.3(b) of thef the contract as
pay out of early
termination as compensation and not a penalty.
As the plai was already
paid three months entitlement, he will only be entitled to the remainingining
nine months to make
up the total period of 12 months under the contract.
p clasoNormaNormal" style="margin-top: 1; margin-bottom: 1">
Counter claim/set off
For any breach done in the
period of his employment should been brought to the attentttention of the
Board, pursuant to
the contract of the 4th April 1997 or to the
Minister, pursuant to the Section 21 of the said Act. As his contract
employs the provision of the
Employment Act in addition to the N.B.V. Act,
and any other laws, and the relevant provision of the Employment Act is s.
50(5) which I will refer to later that bar the plaintiff/defendant to take
action on the defendant/plaintiff for
any misconduct.
th May 1998 refers to
any breaches by the plaintiff, but refer to their discussions and three
months salary in lieu of notice.
Nevertheless, as a fiduciary
breach was raised the court will endeavour to give its reasons.
Is whether the plaintiff
breaches his fiduciary oary obligation to the defendant and the statutory
duties therein?
Hurley ae on the case of
Lister v. Romford Ice and Cold Storage Limited [1956] UKHL 6; [1957] AC 5555
hat it is an implied term
of contract of employment that the employee will exercise rise reasonable care in
the performance
of his duties.”
Even counsel for the
plaintiff/defendant referred to Daniel Mouton v. Selb Pacifiited.
In this cais case the Court accept the principle of Lister v. Romford Ice
and Cold Storage Limited as to duty of care. However, in that case the
Court went further to say “The act of negligence relied upon must be
clearly identified and proved in the ordinary way”. Firstly, in the
defendant/plaintiff’s case, in applying the act of negligence, no evidence
to prove that the defendant/plaintiff
was cited for any act of negligence in
the course of his employment as disciplinary matter which can be a material
fact
in establishing negligence. However by s. 21(3) of the N.B.V. Act, the
defendant/plaintiff had statutory power entrusted upon
him for the running
of N.B.V. Act. S.21 (3) states:-
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“The General Manager shall
be the Chief Executive Officer of the bank and shall be responsible to the
board for the execution
of its policy and management of the bank.”
Section is quite clear
and with very wide power and reflects and strengthens and includes thes the
fiduciary obligation
of the defendant/Plaintiff in the running of the N.B.V.
under his executive power of management. And by s.21(3) the General
Manager
is not subject to other bodies’ direction, apart from the Board, for the
management of the bank. And under s.
4 the general management of the bank
lies with the Board. Section 4 states:-
“There sha a Board of
Directors which, subject to the provisionision of this Act, shall have power to
do all such things
as are in their opinion necessary for or conductive to
the proper discharge of the function of the bank as described in section
3.”
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Section 3 sets out the function
of the bank, managed by the Board on behalf of the bank. By operation of s.
21(3) the
General Manager was responsible for the execution of the decisions
of the Board on policy matters of the bank and the general
executive
management of the bank. He had a vast discretionary power under section
21(3) in executing decisions of the
Board including the general management
of the bank under his responsibility, and this is not an easy task, where
very
little control mechanism in place, apart from board decisions and
provision of the laws. Sometimes it is hard to draw a line
to the exercise
of proper discretion and negligent act in a fiduciary relationship for the
simple reason that no single
human being is perfect and one can fall into
error one way or the other even though one can be happy that he has
perfectly
done something right. In negligent the wrong must be intended or
reckless with regards to good management of the Bank. With
the Selb decision
the negligent act must be of a serious misconduct within the meaning of the
Employment Act. What is serious misconduct is not define, nevertheless, for
the purpose of the defendant/plaintiff situation, serious misconduct
is for bad management of the affairs of the N.B.V. in the course of his
employment, and was careless or negligent in
the running of the N.B.V.
affairs and those misconducts under Clause 6 of his contract of employment.
Again all these
were covered for under Clause 9 of the contract for
disciplinary action and dismissal in the course of employment. For example,
suspension orders could have been made pending disciplinary actions is
brought against him and after dismissal. Serious
misconduct under Section 50
of the Employment Act gives power to the employer to dismiss the employee
however, under Section 50(4) the employee must be charged for such
misconduct as disciplinary charges and the employee must be given an
opportunity to answer. Section 50(4) states:-
“No employer shall dismiss
an employee on the ground of misconductnduct, unless he has given the employee an
adequate opportunity
to answer any charges made against him.”
By Clause 6.1 and 9 of the
contracemployment the plaintiff/defendant in not taking disciplinaplinary
action, on knowledge
of it’s occurrence, waived his rights not to take any
action against the Defendant/Plaintiff and amount to the plaintiff/defendant
satisfaction with his management. Section 50(5), states:-
“An employer shall be deemed
to have waived his rto dismiss an employee for for serious misconduct if
such action has
not been taken within a reasonable time after he has become
aware of the serious misconduct.”
Reasonable time in Section
50(5), I find as time during the dant/plaintiff was in emploemployment and
not after he was
terminated, as after termination he no longer an employee
for the jurisdiction of the employer to deal with him.
Hakwa submitted that the Board
did not discipline the dent/plaintiff for any seriouerious misconduct and
the defendant
is estopped from setting up or trying to set up any other
alternative position.
In my view if the
Plaintiff/Defendant was genuine enough to take disciplinary actionhe
Defendant/Plaintifintiff for failure
to discharge his fiduciary obligations than
the contract was open to him at the time he knew of any breaches. And in
Tremethick's position he would be in a better position to report any
misconduct by the defendant/plaintiff in the course of
his employment to the
Board and even to the Minister at that time he new of any breach, otherwise
the plaintiff/defendant
is estopped by Section 50(5) of the Employment Act.
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Further thet will
endeavour to the followings:
1.
Improper uss of suspense account,
2.t">2. &n Improper oper operation of staff loan,
3. &nbssp;
Reinstatement of staff, Estella Tabi and Peter Sakita,
4. ;
p>
Improper use of suspense
account
The plaintiff/defendant as
in his set off counter claim that in December 1997 to January 1998 he
authorithorized payment
of VT1,369,722 from the bank’s suspense account to
members of Parliament and was in breach of the plaintiff/defendant lending
policy guideline of No. 26 of 21st October 1996.
On the circular instruction No.
26, the usage of the suspense nt was a normal practice byce by the bank.
However, the
previous General Manager issued the instruction to cease usage
of the suspense account, but can only be used for very selective
N.B.V.
internal requirements only. The tendered Heading, Suspense Accounts
maintained by commercial banks, was a general explanation of usage. What
I did not receive is the complete explanation of the whole document for the
Court to have the benefit of other explanation there in to the extent of
suspense account. I can only satisfy that this was
an uncompleted
explanation tendered to Court of what is suspense account and not very
helpful.
In evidence in chief, the
defendant/plaintiff was aware of Accou. 50-990235-81. He refers ters to this
account as suspense
account and to cater for the lending department to lend
to customers on short-term basis. One of the lending was made to
parliamentarian, even though MP can use the normal lending system too. In
cross-examination, he maintained that, even though
the explanatory note did
not specify, it was a practice done with the bank on suspense account
drawings. His statement
was confirmed by the previous General Manager letter
of 21st October 1996. Tremethick admitted in cross-examination
that when he started working with the bank the practice was already
in
place, also used for school fees pending clearance from VNPF payment against
the various loans. He explained that
the suspense account was use only on
temporary basis where customers account entry cannot be affected by the
debit or
credit, and the danger of using such account is that the account
can be overdrawn. He agrees that there were no reasons why
the loans made to
MPs cannot be drawn against their accounts. In cross-examination he still
maintains that the MP loans
should follow the normal lending criteria. He
agrees that the bank may have discretion, and that the General Manager
exercises discretion. This justifies his statement that the General Manager
has the general discretion. However, maintain that
circular No. 26 remains
enforced. If this was so than, was the defendant/plaintiff, being the
present General Manager
in 1997, was subject to the circular instruction of
the former General Manager in the general discharge of his duties?
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By secti(3) the General Manager wasr was responsible only to the Board. The
weight of such instruction No. 26 would be
binding on the
defendant/plaintiff if the Board had passed a resolution on suspense
account, which the Defendant/Plaintiff
will be subject to it. Example, on
the meeting of the Board of the 21st September 1997 where the
Board authorise the management to recruit and dismiss bank officers. I find
that instruction
No. 26 did not take away the discretionary power of the
Defendant/Plaintiff over the usage of suspense account and was open
to him
to use. And if he has exercise it than that was within his power for the
court to interfere with.
Improper operation of staff loan
The plaintiff/defendlleges
that the defendant/plaintiff fail to implement and control the system in
relation to the
provision of staff loans and in breach of express provision
of Section 30(5) of the N.B.V. Act and Part V of the Staff Manual. And the
following staffs were in breach of the said express provision; Watson
Willie, Estella Tabi,
Hancy Morgeror, Salome Fred, Michael Liu, Margareth
Malokele, Astride Rory and Peter Sakita.
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Section 30(6) of the N.B.V. Act
states:an>
“Any person who contravene
this section commits an offence and shall be liable on conviction to a fine
not exceeding 10
Million Vatu or to imprisonment for a period of 5 years or
both such fine and imprisonment.”
The word “this section”
refers to the whole of section 30 provisions. This mean that if the
plaintiff/defendant saw otherwise, in the course
of the
defendant/plaintiff’s employment was in breach of such section, than the
Board or the Minister should lay complaints
to the police for criminal
charges against defendant/plaintiff under Section 30, as the remedy under
Section 30(6) is
for criminal sanction and not for civil actions.
Nevertheless, if this Court rules that there is any breach then the
defendant, as a matter of law would be in breach of section 30 and that is
criminal. I find that to endeavour to address the
civil status of Section 30
provision against the defendant/plaintiff will defeat the purpose of the
requirement of section
30 as intended by Parliament to remain criminal
sanction and not civil. For these reasons, I will not endeavour to proceed
with “improper operation of staff loans” but a matter for the Board
or the Minister to take it up with the police.
Reinstatement of staff
adly guilty of gross misconduct
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The Court accept from the
evidence of Tremethick that he was aware of se breaches of practice,
that has been undertaken
by Peter Sakita where he advances money to his
brother which was not repaid.
The defendant/Plaintiff
explains that Peter Sakita was brought to the Board by the management as the
Board suspended him.
The Board did not approve his termination and he was
re-instated by the Board. And his re-instatement was a matter for the
Board.
However, in re-examination the defendant/plaintiff, terminated his
employment as one of the 20 officers terminated
by the bank. The termination
may have happened after the delegation of the power of dismissal and
recruitment given to
the General Manager by the Board’s meeting of the 21st
September 1997.
Peter Sakita – gross-misconduct
The gross-misconduct referred
to in paragraph 8(A to I) of the er/claim were misconduct thct that were
already decided
upon by the Board on the 4th April 1997 of which
Peter Sakita was re-instated as apparent from those paragraphs that is
paragraph 8(d) refer to July
1994 and March 1997, 8(F) refer to 17th
October 1994. If this was the case then the defendant/plaintiff should not
be blamed for Peter’s re-instatement.
Mrs. Estella Tabi
The Board on the 4th
April 1997 re-insther again. The bank adviser protest on her
re-instatestatement. If this was so than his protest in
my view was considered
before the Board made the decision and re-instated her. Again this is within
the power of the
Board. I find no authority vested in the General Manager to
re-instate or dismiss her against the Board decision until after
the 21st
September 1997 when that power was delegated to him.
Eddie Kalopele and Iata Samaika
>
Hurley sued that proper
lending procedure was not followed.
In the Board meeting of the
21st April 1997, thoseent in that meeting were Daniel Bule as Chairman,
and and Board members
were: Shem Rarua; Eddie Kalopele and Iata Samaika.
Tremethick was aware that Eddie
made a loan application. And he was the person who dealt first with the loan
application,
which he wrote unsecured board member and referred it to the
General Manager for his consideration. On the note “Bank use only”
the daughter working at El-Gecko will be paying for this loan with
assistance from the father.
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There were no security recorded
in the loan application as at that time he had an account with N.B.V. with
the balance
of VT500, while he was loaning for VT300,000. However, the
defendant/plaintiff on referral to him by Tremethick he approved
the loan
with comments that Eddie’s daughter working at El-Gecko will be repaying the
loan off. In other way, at the
time Tremethick dealt with the application,
that information was not available, but on approval it was available and
amount to some form of securing the loan. Even on the 21st April
1997 in the Board’s meeting, Mr. Iata Samaika asked to know if Board members
could loan. The adviser at that time,
Nestor Ellinopoulous, advised the
Board, under Section 30 (4) a Board member can have a maximum unsecured loan
of up
to VT300,000. If this was so, then in Eddie’s case, the loan was in a
way secured by the daughter fortnightly repayment. If
it was a loan up to
VT300,000, which is unsecured loan to be secured, then the
defendant/plaintiff has properly exercised
that discretion to grant.
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Likewise, Iata Samaika, was
also entitled to VT300,000 unsecured loan as a Board member. However, his
wife’s salary, works
at Lenakel Hospital, will transfer fortnightly
repayment to the loan. Even thought these were unsecured loans at least the
General Manager ensured it is secured some how and proper within his
discretion to do on behalf of the plaintiff/defendant.
Mr. Green gave evidence that as
at 31st December 1998 Iata Samaikaan outstanding loan of
VT164,408 and Kalopele was VT159,183.
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I find that the
defendant/plaintiff has ised his discretion in accordance of Section
30(4) at4) at that time in granting
the loan. The responsibility was on the
concerned Board member to repay, if not, the plaintiff/defendant can take
legal
action on them to recover.
r Leiwota Manuina, I am
not assisted very much by any evidence against her.
For these reasons, the counter claim be dismissed apart for claims against Section 30(5) 0(5) against Watson
Willie, Estella
Tabi, Hancy Morgeror, Salome Fred, Michael Liu, Margareth
Malokele, Astride Rory and Peter Sakita which are struck out only
and with
option to the defendant/plaintiff to pursue further if he so wants.
Dated at Port Vila, thrd
day of y of March 2001.
R. MARUM MBE
JUDGE
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