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Temakon v Vanuatu Commodities Marketing Board [2007] VUSC 20; Civil Case 26 of 2004 (20 April 2007)

IN THE SUPREME COURT
OF THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Case No.26 of 2004

BETWEEN:

DALSE TEMAKON
Claimant

AND:

VANUATU COMMODITIES MARKETING BOARD
Defendant

Coram: Justice H. Bulu

Counsels: Mr. Robert Sugden for the Claimant
Mrs. Heather L. Leo for the Defendant

Date of Hearing: 12 April 2007
Date of Decision: 20 April 2007

RESERVED JUDGMENT

Background

1. The Claimant commenced employment with the Defendant on 3 January 1983. On 1st October 2001, as part of a restructuring by the Defendant of its administrative structure, the Claimant’s employment was terminated and she was immediately re-employed in a very similar position to that which she had previously occupied but at a reduced salary of VT200,000 per month.
   
2. The Claimant was paid all of her entitlements upon termination up to 30 September, 2001 and then continued in her new employment from 1 October, 2001 until 17 December 2001. On 17 December, 2001 the Claimant and the Defendant entered into a written contract (contract) for her employment beyond that date in the statutory position of secretary of the Defendant’s Board. The contract specified the Claimant’s duties and provide specifically for some of the Claimant’s benefits and conditions of employment and referred to the staff regulation for others.
   
3. On 13 May, 2002 the Defendants Board at a meeting, decided (Decision) that the Claimant was must be disciplined for revealing information concerning the Defendant’s affairs to her husband and, on that basis, suspended the Claimant from official duties and suspended all her benefits under the contract except her salary was reduced by one half.
   
4. The Claimant remained suspended until 13 November, 2002 when the Defendant dismissed her on the basis of the decision that it had made on 13 May, 2002 that the Claimant was guilty of the offence contrary to section 20 A of the VCMB Act.
   
5. As a consequence, on 13 February, 2004 the Claimant commenced proceedings against the Defendant in the Supreme Court. On 8th October, 2004 leave was granted to the Claimant to amend her claim and as a consequence the Amended Statement of the case was filed on 11th October, 2004.
   
6. The Claimant claimed that:-
   

(a) The decision to suspend her and placed her on half salary and terminating other benefits is void for bias and lack of natural justice. That when the decision was made the Defendant’s Board was chaired by the Board Chairman, Mr. Noel Fionalave. It is Mr. Fionalave who had accused the Claimant of divulging information contrary to section 20 A (1) of the Act and brought the accusation before the Board seeking that she be dealt with by the Board. That Mr. Fionalave bore personal animus towards the Claimant at that time the decision was made. The Claimant was given no notice of the accusation that was made against her and was given no opportunity by the Defendant to defend herself.

(b) The decision to dismiss the Claimant on 13 November, 2002 amounts to unjustified dismissal under section 50 of the Employment Act. The Claimant was not given an opportunity between 13 May and 13 November, 2002 to be heard in relation to the charges. Despite responding to the charge against her through legal counsel on 16 May 2002 no opportunity was afforded to the Claimant to be heard.

Default Judgment

7. The Amended Claim was filed on 11th October, 2004 and serve on Jack I. Kilu and Associates in Port Vila on the same date at about 4.42 p.m. No response was filed by Jack I. Kilu & Associates and no defence was filed either within the times stipulated under rule 4.13 of the Civil Procedure Rules.
   
8. A request for the Court to enter judgment in default against the Defendant was made on 2 November. The Court however, only granted judgment in default on 24 January 2005. No defence had been filed even by that date.
   

Application to set Aside Default Judgment

9. On 9th March, 2006 an Application to set Aside Default Judgment was filed in the Supreme Court. The Application contained the defence to the claim as well and it is set out as follows:-
   

“The applicants defence to the claim are:-

(a) Claimant is not entitled to severance pay from 3rd January 1983 to 1st October 2001 as her employment entitlements for this period was paid on 3rd October 2001 to her ANZ Bank Vila Account No. 124210 bearing the total sum of VT11,804,984.

(b) For the period 17th December 2001 to 16th December 2005 the Claimant is not entitled to any severance pay and other entitlements due to her dismissal from VCMB:-

(i) Claimant was dismissed from employment for breaching clause 12 (2) of her employment contract with VCMB;

(ii) Claimant is not entitled to any payment between 17th December 2001 and 13th May 2002 the date she was suspended, nor is she entitled to any payments for the period 13th May 2002 to 17th December 2005 the date her contract was supposed to have ended because she was dismissed;

(iii) Defendant had followed internal disciplinary process to dismiss the Claimant from employment;

(iv) The Claimant was not immediately dismissed which warranted immediate termination nor was she terminated or dismissed for unjustified reasons. The reason for termination was part of Claimant’s obligation under the term of her contract which she had breached.

(c) In the event that the court finds against the Defendant in (b) (i), (ii) (iii) and (iv) above, the Defendant says the amount of VT13,360,793 ordered against them is unjustified and grossly excessive in the light of the assessments of payments calculated under the Employment Act and refer to the matter of Wendy Garu –v- Municipality of Luganville Civil Case No. 12 of 1997 decided in the Supreme Court of Vanuatu on 12 November 2004.”

The Law

10. The Default Judgment entered on 24 January 2005 was done pursuant to Part 9 of the Civil Procedure Rules. The amount claimed is VT12,730,269.
    
11. Rule 9.5 provides that a defendant against who judgment has been signed may apply to the Court to have the judgment set aside. The application may be made at any time. It must set out the reasons why the defendant did not defend the claim, and must give details of the defendants defence to the claim, and must have with it a sworn statement in support of the application.
    
12. Subrule (3) of rule 9.5 provides that:-
    

“The Court may set aside the default judgment if it is satisfied that the defendant:-

(a) has shown reasonable cause for not defending the claim; and

(b) has an arguable defence, either about his or her liability for the claim on the amount of the claim.”

Reasonable cause for not defending the claim

Applicant’s case

13. Legal counsel for the Applicant simply submitted to this Court that previous lawyers who had represented the Defendant did not show up. Nothing more was put to the Court.
    
14. Karl Batick in his sworn statement filed on 9th March 2006 deposed to the fact that:-
    

(a) In the matter of Dalse Temakon –v- VCMB CC26 of 2004, VCMB had engaged a legal counsel from Jack Kilu & Associates to represent it. This was made possible through a retainer agreement signed on 22 August 2003.

(b) After signing of the agreement VCMB believed that Jack Kilu & Associates were taking care of their interests in the civil matter at hand. This believe proved to be wrong when he received a copy of the Default Judgment on 15 February 2005.

(c) On and after receipt of the Default Judgment he believed that Jack Kilu & Associates were still acting for them and were appearing for them at enforcement conferences on 4th July and 15th July 2005.

(d) After 15th July it become clear that the firm the Defendant had retained had “continued not to appear in Court to defend us in this matter”.

(e) The Defendant then withdrew from Jack Kilu & Associates and requested Mr. Ishmael Kalsakau to represent them.

Defendant’s case

15. Counsel for the Defendant contends that no reasonable cause has been shown why VCMB has not defended the claim because:-
    

(a) The Supreme Court Claim was first filed on 13 February 2004.

(b) Sworn Statement of service of Dalse Temakon shows that the claim was served on the Defendant VCMB on 1st April 2004.

(c) Unfiled copy of the claim was served on Mr. Kilu also and Mr. Kilu advised by letter that he will respond on being served with filed copies of the claim.

(d) The Applicant does not explain why nothing has been done between 1st April 2004 and 24 January 2005 when Default Judgment was entered. No reasons whatever have been given to the Court for the non-action.

Considerations

16. The first test that the Court must be satisfied of is that the Defendant (VCMB in this case) has shown reasonable cause for not defending the claim pursuant to rule 9.5 (3).
    
17. What does that mean. In my view, it simply means that the Defendant must show to the Court reasons and the Court is satisfied of the reasons that caused the Defendant not to defend the claim, are good reasons. The reasons must be good reasons.
    
18. The reasons advanced by the Defendant, in my view, do not amount to reasonable cause or good reasons for failing to defend the claim. The claim is for a total sum of approximately VT13 million. That is a huge sum being claimed against the Defendant. It is a very serious matter indeed. However, there is no evidence that since the claim was served on the Defendant, it took steps regularly to talk to its legal counsel to ascertain the status of the case, and, if need be, to give instructions on matters arising in the case.
    
19. The Application fails on this ground.
    

Has good defence about liability for the claim or about amount of the claim?

Applicant’s case

20. The second test is that the Court must be satisfied that the Defendant has an arguable defence about liability for the claim or about the amount of the claim.
    
21. The defence as contained in the Application to Set Aside Default Judgment:-
    

(a) States that the Claimants is not entitled to severance pay from 3rd January 1983 to 1 October 2001 as employment benefits for that period had been paid.

(b) States that the Claimant is not entitled to any severance pay and other entitlements for the period 17 December 2001 to 16 December 2005 due to her dismissal from VCMB.

(c) States that in the event that the Court finds against VCMB, the Defendant says the amount ordered against it is unjustified and grossly excessive in the light of the assessments of payments calculated under the Employment Act.

22. Counsel for the Defendant contended that the Claimant may be entitled to some benefits but not to the amount claimed and ordered in the Default Judgment.
    
23. The secrecy provision of the VCMB Act and her contract of employment prohibits the Claimant from divulging any information about her employer’s business without permission frist obtained from the Defendant. The Claimant’s employment was terminated on 13 November 2002 because she breached the terms of her contract. Mrs. Leo continued that the Board has the power to suspend and terminate the employment of the Claimant. Where the Board suspends an employee as in this case, the management is charged with the duty to investigate the matter and then return its findings to the Board for a determination.
    
24. Mrs. Leo continued that the resolution of the Board meeting, on 13 November 2002 about the Claimant’s case was too general. The resolution stated that it “was resolved that since this matter has taken a long time to be resolved, the chairman is mandated to work with the management to provide all evidences relating to the Board secretary’s actions.” Why terminate on the same date of the resolution? She contended that may be evidence was available of the Claimant’s wrong doing but such evidence was not made available to the Board. There is no other rational explanation for the termination to have taken place on the same date of the Board resolution.
    
25. Mrs. Leo continued that the position of secretary to the Board is a very senior position. She is answerable to the Board. The suspension period was long and it is unreasonable of the Claimant not to have responded to the allegations against her, even when she was not specifically requested to put her views to the Board for consideration. The Board waited for her response until 13 November 2002. It was unfair for her to keep the Board waiting for such a long period of time.
    
26. Mrs. Leo further contended that this Court has a duty to consider the evidence of the Defendant through sworn statements of various witnesses especially Karl Batick, Noel Fionalave and Jean Alain Mahe to determine whether the Claimant breached the secrecy provisions of her employment contract.
    
27. Mrs. Leo finally submitted that:-
    

(a) From 13 May 2002 to 13 November 2002 the Claimant is entitled to her benefits.

(b) On termination on 13 November 2002, the Claimant is not entitled to the payment of any benefit as she had breached her contract.

Respondent’s case

28. Mr. Sugden on behalf of the Claimant contends that the Defendant has no arguable case because:-
    

(a) The claim against VCMB is that the decision to suspend and then terminate the Claimant cannot stand as it was biased and no opportunity was given to the Claimant to answer the charges against her. The termination of employment was an unjustified dismissal under section 50 of the Employment Act. The Application to Set Aside the Default Judgment fails to deal with the cause of termination which are bias and natural justice denied as pleaded in the claim.

(b) The Claimant responded to her suspension to the Defendant on 16 May 2002 putting her views to the Defendant and further on 31 May 2002. However, no reply was ever received from the Defendant.

(c) No opportunity to be heard was granted to the Claimant by the Defendant on 13 May 2002 up to 13 November 2002 when her employment was terminated.

(d) No justification has been put to this Court why that did not happen.

(e) No reasons has been put to this Court to justify the suspension and termination in the manner it happened.

(f) The minutes of the Board meeting on 13 November 2002 contains no authority by the Board to terminate the Claimant’s employment. In fact the Board mandated the then chairman to commence an investigation to determine the Claimant’s case. The chairman had no authority to terminate the employment of the Claimant.

Considerations

29. The Defence as pleaded in the Application to set aside the Default Judgment contains no reasons whatsoever in justifying VCMB’s actions to terminate the Claimant’s employment in the manner it did. The evidence before this Court:-
    

(a) Shows that an allegation was made to VCMB Board by Noel Fionalave that the Claimant had leaked information about internal affairs of the Defendant to her husband.

(b) Shows the VCMB Board considered the allegation and suspended the Claimant on 13 May 2002.

(c) Shows that on 13 November 2002, on finding that the matter had not progressed at all since the Board meeting of 13 May 2002, the Board specifically “mandated (the chairman) to work with management to provide all evidences relating to the Board secretary’s actions”.

30. Contrary to the resolution of the Board the then chairman, Gilbert Norman, wrote to the Claimant on 13 November 2002 stating that the “Board met on 8th November 2002 and resolved to terminate your employment with the immediate effect for reasons stated in the letter (of 13 May 2002)”. This was a blatant lie by a person who is the chairman of the VCMB Board, who carries with him public trust that he will act lawfully and be honourable in his actions and decisions in such a public office. VCMB Board is, in my view, equally culpable in that it did not take any step to ensure that the decision is revoked and the investigation process as decreed by the Board continue to determine the truthfulness of the allegation against the Claimant of leaking information about internal dealings or affairs of the VCMB.
    
31. In my view, the Court’s duty in an application such as this is not to examine the evidence available at the time the Decision was made but rather to examine the manner or process followed by the Board to determine whether that process was fair pursuant to the laws of this jurisdiction. There is no evidence before this Court that:-
    

(a) The Claimant was invited to respond to the allegations made against her;

(b) The Claimant was invited to attend the Board meeting on 13 May 2002 to put her case to the Board before a decision was made.

(c) The Claimant was invited to put her version of events in writing to the Board.

(d) The Claimant was invited to attend nor address the Board in writing on 13 November 2002 before the decision was made by the Board.

(e) The Claimant was invited to address the chairman verbally or in writing about the allegations before he wrote the letter dated 13 November 2002 terminating her employment.

32. There is no evidence before this Court that the Board complied with its own disciplinary process before terminating the Claimant’s employment.
    
33. There is no evidence that the Board accorded the right to natural justice to the Claimant.
    
34. There is no evidence that the Board complied with section 50 of the Employment Act.
    
35. For those reasons, I am not satisfied that the Defendant has an arguable defence about its liability for the claim nor the amount of the claim.
    
36. The Orders of the Court are:-
    

(a) The Application is dismissed with costs on a standard basis and to be taxed if not agreed.

(b) The Defendant is restrained from dealing or dealing further with the leasehold properties having registered titles:-

(i) 11/OD31/010

(ii) 11/OI21/002

(iii) 11/OD31/001

(iv) 03/OH71/026

and pay any money that it has received in respect of any of them to the Sheriff.

(c) That the warrant be renewed giving the Sheriff time to execute it.

(d) That the Sheriff immediately proceed to execute the warrant.

(e) That there be a further enforcement conference in one month time for the Sheriff to report his progress with the warrant.

(f) That this order and the new warrant be served on the VCMB through its lawyer by the Sheriff within 7 days.

DATED at Port Vila, this 20th day of April, 2007.

H. BULU
Judge