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Mawa v Vanuatu Internal Air Services Ltd [2009] VUSC 24; Civil Case 133 of 2006 (7 April 2009)

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

Civil Case No. 133 of 2006

BETWEEN:

DAVID PETER MAWA
Claimant

AND:

VANUATU INTERNAL AIR SERVICES LIMITED
First Defendant

AND:

AIR VANUATU LIMITED
Second Defendant

Coram: Justice N. R. DAWSON

Date of Hearing: 18th March, 2009
Date of Decision: 7th April, 2009

Counsel: Claimant: Mr. Daniel
1st Defendant: Mr. Malcolm
2nd Defendant: " "

DECISION

1. The background to this matter is that in March 1998 the Claimant commenced training with the First Defendant as a Trainee Pilot. In June 1999 the Claimant’s employment with the First Defendant was confirmed. On 15th January 2002 the Claimant and the First Defendant signed an employment contract commencing on 1st November 2001 and due to expire on 31st November, 2004 (sic). On 27th March, 2002 the Claimant’s Employment Contract was terminated by the First Defendant. On 26th July, 2006 a Supreme Court Claim was filed in this Court.
   
2. Two applications have been made by the Defendants. They are:-
   
   1. To Strike out the claim against the Second Defendant.
      
   2. To Strike out the Claim against both Defendants.
      
3. In the Claimant’s Supreme Court Claim it states that the Second Defendant "has acquired the First Defendant". During the course of the hearing this was clarified to the Court by counsel that the Second Defendant has purchased shares in the First Defendant. It was conceded by the Claimant that it is a basic principle of company law that a share holder is not liable for a company’s liabilities provided the shareholders shares have been paid for in full. There was no suggestion that this is the case here. It was therefore conceded by the Claimant that it is proper for the Second Defendant to be struck out as a party to this case as the Claimant has no cause of action against the Second Defendant. The claim against the Second Defendant is struck out accordingly.
   
4. The remaining Defendant submits that this is an employment dispute and is therefore governed by the Employment Act and the limitation period for bringing an action under the Employment Act is governed by section 20 which says:
   

"No proceedings may be instituted by an employee for the recovery of remuneration after the expiry of three years from the end of the period to which the remuneration relates."

5. The Defendant now accepts that its Strike Out Application cannot apply to all of the Claimant’s Supreme Court Claim and has properly referred the Court to the case of National Bank of Vanuatu v. Cullwick (2002) VUCA 39:CA11/02 (1 November 2002).
   
6. The Claimant submits that the only relevant limitation period is that in section 3 (1)(a) of the Limitation Act 1991 (CAP 212). Section 3 of that Act states:-
   

"Limitation of Actions of contract and tort and certain actions

(1) The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued, that is to say –

1. actions founded on simple contract or on tort;"
   

7. The particulars of the damages claimed by the Claimant are set out in paragraph 13 of its Supreme Court Claim. Portions of the Claimant’s claim are in dispute and some are not. They may be summarised as follows:-

a) Paragraph 13 (i)(a) - the Defendant accepts that the Claimant may claim for severance but notes that liability is disputed.

b) Paragraph 13 (i)(b) - The claim for severance for the full period of the contract that was terminated - this claim is still in dispute.

c) Paragraph 13 (i)(c) – The Claimant now accepts that this claim is a doubling up of its claim in paragraph 13 (i)(b) above and accordingly this portion of the claim is struck out.

d) Paragraph 13 (i)(d) - The claimant now accepts that this also is effectively a doubling up of his claim in paragraph 13 (i) (b) above and therefore this portion of the claim is struck out.

e) Paragraph 13 (ii) - For the full term of the contract – this portion of the claim is in dispute.

f) Paragraph 13 (iii) - Unjustified dismissal claim pursuant to section 54 (6) of the Employment Act - it was accepted by the Defendant that the Claimant is entitled to bring this claim and it should not be struck out, although the Defendant still reserves the right to contest the claim.

g) Paragraph 13 (iv) and (v) -The Claimant advises that these claims of a various nature are based on tort. The Defendant accepts that this portion of the claim should not be struck out but disputes the various claims.

8. The portions of the claim set out in paragraphs 13 (i) (c) and 13 (i) (d) are struck out.
   
9. The portions of the claim set out in paragraphs 13 (i)(a) and 13 (iii), (iv) and (v) remain in place for a later substantive hearing.
   
10. The portions of the claim still subject to this Strike Out Application are those in the Supreme Court Claim paragraphs 13 (i)(b) and 13 (ii).
    
11. The Supreme Court Claim in paragraphs 13 (i)(b) and 13 (ii) are as follows:
    

13. In consequence of the First Defendants actions, the Claimant has suffered loss and damages.

Particulars

(i) Severance

b) Period 1st November 2001 to 31st November 2004 (sic) (Contract)

= 3 years 30 days

= therefore (a) + (b)

= 3 years 4 months + 3 years 30 days

= 6 years 5 months

Therefore 6.5 years x VT 170,000 ÷ 2 = VT 552,500

13. (ii) Contract term remaining

12. Whether these portions of the Supreme Court Claim should be struck out depends upon whether the limitation period set out in s. 20 Employment Act (3 years) or s. (1)(a) Limitation Act (6 years) applies.

13. In National Bank of Vanuatu v. Cullwick [2006] VUCA 39; CA 11-02 (1 November 2002), at page 5 of that judgment, the Court of Appeal said:-

"The fact that –section 20 – is not so positioned within the Act but it is to be found within Part V headed "Remuneration" suggest that its operation is limited to that class of payment.

The terms of s. 20 also indicate this section is limited in this way. The time limit is against the instituting proceedings "for recovery of remuneration".

The word "remuneration" is not expressly defined in the Act. However there are many indications from the use of that expression in various sections of the Act which indicate that remuneration is a payment made periodically during the currency of the employer and employee relationship, and covers payments due from the employer as a reward for ongoing work provided by employee. –Section 20 – itself provides that the limitation period runs from "the end of the period of which the remuneration relates", and the conclusion we have expressed gains support in particular from provisions ss. 16(4), (5),(6) and (7), 17(3), 21(2)(a) and (3), 31, 36(2), 49(3)(b) and 53.

In Sections 16(8) and 64(1) the expression "remuneration" is used in ways that indicate that there are kinds of payments which an employer may become liable to pay that are not remuneration. Section 16(8) says that in the case of termination of contract, "remuneration and allowances" shall be paid as soon as the service has ceased. Section 64(1) refers to payment "by way of remuneration or otherwise, and, arising out of, his contract of employment".

In our opinion s.20 is limited in its operation to periodic payments that become due to employees during the currency of a contract of employment. The expression covers ordinary wages paid periodically whilst an employee is at work, but extends to include annual leave and sick leave payments that become due whilst the contract of employment remains on foot: see s. 31."

At page 7 of its decision, the Court of Appeal went on to say:-

"In our opinion ...... s.20 would act as a bar to prevent the instituting of proceedings by the respondent against the bank in respect of remuneration claimed by her. However in so far as the applicant wishes to bring independent proceedings for severance allowances, s.20 does not prevent her doing so."

14. The effect of this decision of the Court of Appeal is that if either portion of the Supreme Court Claim still subject to this Strike Out Application comes within the definition given in paragraph 12 above as remuneration, then it is subject to s.20 Employment Act and will be struck out. If not, then s.3 (1)(a) Limitation Act applies, the Strike Out will fail and that portion of the claim will remain and go to a further substantive hearing on all the portions of the claim remaining.

15. The claim under paragraph 13(i)(b) is clearly a claim for severance for both the period of the Claimant’s employment and for the period for which he would have been employed had his contract of employment not been terminated. A severance payment becomes due for payment upon the conclusion of an employment relationship. It is not a periodic payment that becomes due to an employee during the course of an employees employment, as described by the Court of Appeal in Cullwick. For that reason, the portion of the claim under paragraph (i)(b) cannot be defined as remuneration, the 6 year limitation under the Limitation Act applies, and this portion of the Supreme Court Claim is not struck out.

16. The claim under paragraph 13(ii) does not explicitly say what the amounts claimed are for, but it appears to all intents and purposes to be a claim for the Claimants salary from the time when his employment contract was terminated up to the time when his employment contract was due to expire. Clearly, these payments do fall within the definition provided by the Court of Appeal as remuneration, s.20 Employment Act applies, and this portion of the Claimants Supreme Court Claim is out of time and is struck out.

17. For clarification, the following portions of the Claimants Supreme Court Claim remain at issue and will need to go to a substantive hearing if the parties cannot agree upon a settlement:-

1. paragraph 13 (i)(a)
   
2. " 13 (i)(b)
   

100. " 13 (iii)
     

4. " 13 (iv)
   
5. " 13 (v)
   

18. The costs in this matter remain in the cause.

Dated at Port Vila, this 7th day of April, 2009

BY THE COURT

N. R. DAWSON
Judge