IN THE HIGH COURT OF JUSTICE BETWEEN VINCENT LYNCH AND PUBLIC TRANSPORT SERVICE CORPORATION

Transcription

1 REPUBLIC OF TRINIDAD AND TOBAGO CLAIM NO CV IN THE HIGH COURT OF JUSTICE BETWEEN VINCENT LYNCH AND Claimant PUBLIC TRANSPORT SERVICE CORPORATION ********************************************** Before: Master Alexander Defendant Appearances: For the Claimant: Mr Christopher Sieuchand instructed by Ms Aisha Donowa No Appearance for the Defendant DECISION 1. It is the case of the claimant that he has been employed with the defendant company on contract since in or about June, Since that time he has held different positions in the company; all of which were at an elevated managerial level. Over this nineteen year period in the employ of the defendant company, there was never a break in his service. On 21 st May, 2010 the claimant signed a contract of employment (hereinafter the said contract ) with the defendant company effective 1 st April, 2010 to serve as Director, Transition and Infrastructure until 30 th March, Pursuant to the said contract, he was entitled to a monthly salary of $27, for the contractual period in addition to benefits stated therein. 2. On 23 rd December 2010, the claimant received a letter stating that his engagement was terminated with immediate effect. The letter further indicated that the defendant company Page 1 of 12

2 was relying on Clause 6 of the Schedule of the said contract (reproduced below) in effecting termination. 3. By letter dated 29 th December, 2010 the claimant notified the defendant company that the termination constituted a breach of the said contract. Pre-action protocol letters were sent to the company on 14 th March, 2011 and 11 th May, 2011, to which no response was made. These proceedings were thus instituted on 6 th June, The defendant company failed to enter a defence in the time fixed for doing so and judgment in default of defence was entered against it on 30 th January, All material facts pleaded are deemed to have been determined in favour of the claimant. Before me is the assessment of the claimant s damages upon the defendant company s breach of contract. 4. As a rule, damages for breach of contract should, so far as money can do so, compensate a claimant to the extent that such sum of money will put him in the same position as he would have been in if the contract had not been breached. In order to establish a claim to damages resulting from a breach of contract, a claimant must show that the loss is not too remote. The test for remoteness is to be found in Hadley v Baxendale 1. See also Victoria Laundry (Windsor) Ltd v Newman Industries 2 which notes, [A] type or kind of loss is not too remote a consequence of a breach of contract if, at the time of contracting (and on the assumption that the parties actually foresaw the breach in question), it was within their reasonable contemplation as a not unlikely result of that breach. 5. The termination of the claimant s employment before the end of the contractual period, without notice, amounted to a breach of contract. He claims he has suffered a loss of salary and other benefits consequent on this abrupt severing of the employment relationship. The loss sustained by the claimant was not too remote as under the said contract he was entitled to a salary and other benefits to which he is now deprived as a result of the breach. The claimant submits that he is entitled as follows: 1 Hadley v Baxendale (1854) 9 Exch Victoria Laundry (Windsor) Ltd v Newman Industries [1949] 2 KB 528, Page 2 of 12

3 (i) Loss of salary for 15 months amounting to $411,000.00; (ii) Unutilized vacation leave entitlement of 144 days which amounts to $216,780.91; (iii) Gratuity of 20% of the basic salary for the period April, 2010 to January, Loss of salary 6. This court notes Clauses 6 and 7 of the Schedule to the said contract which states: 6. The employment of the person engaged may be terminated at any time after the expiration of six (6) months from the date of commencement of this agreement by either party giving to the other one (1) month s notice in advance such notice to be in writing. 7. In the event of the termination of the engagement of the person engaged at any time prior to the expiration of three (3) months from the date of commencement of the term of the engagement for any reason other than ill-health of the person engaged or of the termination of the agreement by the person engaged after the period of three (3) months without him first giving one (1) month s notice of such intended termination, the person engaged shall pay to the Corporation a sum equal to one (1) month s salary as liquidated damages. 7. On its face, this highlights that the defendant company was not bound to keep the claimant employed for the entire contractual period and could have terminated his employment at any point by giving one month s notice. 3 To be noted here is that the contract (or Clause 6 of the Schedule under which the defendant company purported to act) is silent with respect to payment in lieu of notice. The Dominican case of Ducreay v Dominica Water Sewerage and Company Ltd DM 2004 HC 1 presented a matter where the contract provided expressly for termination by the claimant upon notice to the defendant but was silent on termination by the defendant. Master Cottle noted: 3 McGregor on Damages 17th ed para provides that, when the defendant has a right to terminate the contract before the end of the term damages should only be awarded to the end of the earliest period at which the defendant could have so terminated the contract, a conclusion accepted in Marsh v National Autistic Society Guidance was also sought from Toon v cscape Strategic Internet Services Ltd 3, in which case the Employment Appeal Tribunal held that it was trite law that a tribunal had to assume that the party in breach would have performed the contract in the way most advantageous to it. Page 3 of 12

4 In order for the court to imply a term into a contract that term must not only be reasonable it must also be necessary. In the circumstances of this case I find it both reasonable and necessary to imply a term providing for termination upon reasonable notice by the defendant into the present contract. I find it inconceivable that both parties would not have intended to retain a right to part ways as employer and employee upon reasonable notice. [emphasis mine] 8. The claimant has brought into issue in his supplemental submissions the question of notice and/or what would constitute a reasonable period in the circumstances of the present case. It was submitted that the said contract of employment contained no applicable stipulation as to the period of notice required to terminate the employment so the claimant was entitled to reasonable notice. It was argued also that the mere reference in a contract to a Schedule without more is not sufficient to include every clause contained therein as a term of the contract. What was required is a clear intention to include and/or incorporate every clause in the Schedule into the contract in order for this to occur. This was absent in the case at bar. In fact, there was a clear and manifest intention to include only the clauses relating to the performance of the claimant so these were incorporated and/or included from the Schedule namely, Clauses 2 (general duties); 5 (dismissal) and 8 (liability to make good damages). To bolster his position, the court was pointed to item number 4 of the said contract which expressly refers to the performance of the person engaged and directs one to the parts in the Schedule that deal with performance. It was further submitted that termination on the grounds of performance was subjected to Clause 5 of the Schedule and not Clause 6 under which the defendant company purported to act. Clause 6 applies to a consensual separation or a unilateral termination not related to performance but not separation on the basis of performance. These arguments were accepted. Notice 9. The assessing court was thus responsible for determining what would be a reasonable period of notice to be given to the claimant in this case. Counsel for the claimant contends that since he was employed with the defendant company for a period of 19 years and held senior managerial positions, notice of 15 months was reasonable in this regard. Page 4 of 12

5 10. To determine this issue, this court turned to the evidence of the claimant. He states that on 23 rd December, 2010 (2 days before Christmas) he reported to duty as usual and worked the entire day without any unusual occurrences. He left work around 4:50 p.m. and on the way home received a call from his wife indicating that a letter was just delivered to his premises. She read the contents which indicated that the defendant company, in reliance on Clause 6 of the Schedule attached to the said contract, had terminated his services with immediate effect; as part of a restructuring and re-engineering process being undertaken so as to ensure efficiency in the delivery of services. It is also his evidence that prior to this occurrence, there was no indication of this action being taken by the defendant company and he had not received any complaints or concerns about the way in which he performed his duties. He states further that he had been paid gratuity on his successful completion of all previous contracts of employment with the defendant company. He was, therefore, surprised and shocked by the sudden, unexpected termination of his services with the defendant company, which he had served loyally and sacrificially for 19 years. 11. As a rule, the reasonableness of the notice is contextual, so each case is decided on its on facts having regard to factors such as nature of employment; length of service; age of the employee; availability of similar employment; and the experience, training and qualifications of the employee. See Bardal v The Globe 4 where the test to be applied in determining what constitutes reasonable notice in cases for wrongful dismissal was stated by Mc Ruer CJ thus, The contractual obligation is to give reasonable notice and to continue the servant in his employment. If the servant is dismissed without reasonable notice he is entitled to the damages that flow from the failure to observe this contractual obligation, which damages the servant is bound in law to mitigate. Further, this was the approach adopted in Jupiter General Insurance Company Limited v Ardeshir Bomanji Shroff 5 by Maugham LJ who noted that the application of the test, vary with the nature of the business and the position held by the employee. 4 Bardal v The Globe & Mail Limited (1960) 24 DLR (2d) 140 per Mc Ruer CJ at page 143 where a plaintiff hired on a permanent basis as an advertising manager was discharged after 16 years and1 year s notice was deemed reasonable. 5 Jupiter General Insurance Company Limited v Ardeshir Bomanji Shroff [1937] 3 AER page 74 Page 5 of 12

6 12. Of note also is the statement of Sir John Donaldson in Yorkshire Engineering and Welding Company Limited v Burnham 6 to wit that: The essence of the cause of action for wrongful dismissal is that the employee is dismissed prematurely. If it is a fixed term contract, he is dismissed before the end of the term. If it is a running contract, his contract is terminated without notice or with less notice than that to which he is entitled under the contract. The damages to which he is entitled consist of the net loss flowing from the premature nature of the dismissal. Prima facie the measure of damage is what the employee would have earned between the time of dismissal and the earliest moment at which he could properly have had his contract terminated less any benefits which he has received and which he would have received if he had been properly dismissed. [emphasis mine] 13. Of further relevance is the statement of Permanand J (as she then was) in Satnarine Bunsee v Alstons Building Enterprises Limited 7 as taken from Hepple and O Higgins Employment Law 2 nd edition page 204: The length of notice required on either side to terminate the contract may be agreed upon expressly in the contract itself. It may be fixed as a result of a term implied in the contract, or it may be fixed by a custom applicable to the particular industry or occupation. In the absence of any such term or any such custom, the period of notice required by law is a reasonable period of notice. What length this is depends upon all the circumstances of the relationship. Factors such as length of service, seniority, rate and periodicity of pay are amongst those to be taken into account, as well as the consequence of the employer, in assessing what is a reasonable period of notice. 14. I accept that there is no rule laid down as to what is reasonable notice in particular classes of cases. In the instant case at bar, I also considered and accepted that there is no rule that external terms cannot be expressly incorporated into a written contract, once it is made clear that those terms are to be so incorporated. In addition, a look at the said contract shows that some clauses in the Schedule (specified above) were expressly incorporated into the said 6 Yorkshire Engineering and Welding Company Limited v Burnham [1973] 3 AER 1176 at page Satnarine Bunsee v Alstons Building Enterprises Limited HCA no 5953 of 1988 Page 6 of 12

7 contract. The contention of counsel for the claimant having been accepted, damages to the claimant would be assessed by determining reasonable notice. In so doing, I take into account he was dismissed at age 68; he can hardly be expected on his abrupt release into the competitive labour market to easily find suitable employment or that which would equate reasonably with the duties, responsibilities and benefits to which he was entitled, while in the employ of the defendant company. In this regard also, I note the evidence of the claimant who states, [W]hile I appreciated that my contract provided for termination I always felt secure in my employment with the Defendant, as it was recognized that I played a pivotal role in the organization and I had always discharged my responsibilities with due care and therefore there did not appear to me to be any legitimate reason for my termination. Given my age I think it would have been unreasonable for my employer to be of the belief that I could re-enter the job market with any degree of certainty or success in finding employment. Of note also is his evidence that he has explored the possibility of gaining employment in the private and public sectors, with a view towards mitigating his losses. However, whilst there were available positions in senior management in the private sector, they were specifically targeted to persons of various competencies which he did not have. With respect to the several openings in the public sector, he states that given his experiences with the government, especially on contract, I could no longer feel confident in my job security with them. As at the date of assessment, the claimant has not been able to obtain alternative employment and I accept that he did do what he could to mitigate his damages. 15. Reasonableness of notice on the present facts was determined having regard to: i. the character of the employment; ii. the length of service (seniority); iii. the age of the employee; iv. the availability of similar employment; v. the experience, training and qualifications of the employee; vi. the rate and periodicity of pay. Page 7 of 12

8 16. In determining what would be reasonable notice in the context of the present case, I also considered the learning in Edgar Lum Wai v Alstons Building Enterprises Limited 8, where the plaintiff, who was employed for 40 years and 2 months with the defendant, had his employment terminated with immediate effect. It was held that a reasonable period of notice in the circumstances of that case was 18 months, although the court accepted that for a manager 12 months is usually reasonable. The judge also held that the plaintiff is entitled to 18 months remuneration, including allowances received immediately before the termination of his services. In the present case, the claimant was employed 19 years (not 40 years as in Lum Wai) so I was minded to hold that a shorter period of notice than in Lum Wai s case would be reasonable. 17. To arrive at the requisite period of notice, several other cases showing the relation between length of time employed with a company and the length of notice deemed as reasonable were considered including: Gillespie v Bulkley Valley Forest Industries 9 where in an action for wrongful dismissal of a plaintiff employed for 5 years as the Production Coordinator of the defendant company, reasonable notice was held to be 12 months. Chadburn v Sinclair Canada Oil Company 10 - where the employment of a senior employee (age 53) with the defendant company for 9 years was terminated because of internal re-organization of the defendant s business and it was held that 6 months notice was reasonable. Duncan v Cockshutt Farm Equipment Limited 11 where 1 year s notice was held to be reasonable for a branch manager with 27 years service. 8 Edgar Lum Wai v Alstons Building Enterprises Limited HCA 5957 of Gillespie v Bulkley Valley Forest Industries (1973) 30 DLR (3d) Chadburn v Sinclair Canada Oil Company (1966) 57 WWR Duncan v Cockshutt Farm Equipment Limited (1956) 19 Western Weekly Reports 554 (Maitob) Page 8 of 12

9 Grundy v Sun Printing and Publishing Associates 12 where in an action for wrongful dismissal there was no evidence of any custom as to length of notice to which, in the absence of agreement, an editor was entitled and it was held that 12 months notice or salary in lieu of notice was reasonable for the editor; and 6 months for the sub-editor. The plaintiff was entitled to damages for 12 months less what he could have earned during that period. Kenneth Daniell v Diversey Corporation Eastern Caribbean Limited 13 where a director of a company with 20 years service was entitled to 12 months notice. Mohammed Rahaman v Industrial Gases Limited 14 where 6 months notice was deemed reasonable for a manager of the Steel Department with 7 years service. 18. The cases of Duncan v Cockshutt (supra) and Kenneth Daniell v Diversey Corporation (supra) were particularly helpful in this exercise. The employee in Kenneth Daniell had a similar tenure of office with his company as the present claimant so I was guided by the number of years awarded by the court in that matter. In addition to the case law, I considered, in particular, the fact that this claimant: was employed continuously on contract for 19 years preceding his unlawful termination; held increasingly elevated managerial positions throughout his employ, including at one point the position of acting Chief Executive Officer; possessed the training, qualifications and experience; was of advanced age (68); was thrust abruptly onto the open, competitive labour market; would likely encounter challenges in securing an available similar/comparative employment, given the current economic realities locally, regionally and globally. 12 Grundy v Sun Printing and Publishing Associates (1916) 33 TLR of Kenneth Daniel v Diversey Corporation Eastern Caribbean Limited HCA 3053 of 1984 per Permanand J 14 Mohammed Rahaman v Industrial Gases Limited HCA 2924 of 1976 Page 9 of 12

10 19. This is a claimant who has devoted a large part of his working life to the defendant company, occupying senior executive and supervisory positions of responsibility. The evidence shows that he was a key man in the defendant company and the introduction of new policies geared at realignment and re-engineering do not excuse the giving of reasonable and/or proper notice to the claimant upon dismissing him. I note also that there is no evidence of any customary practice as regards notice in his industry. To my mind, despite his advanced age the claimant could have completed and, it is his evidence, did look forward towards successfully completing his 2 year contract with the defendant company. He now would have some challenges finding work, given his swift and unexpected release back into the open competitive labour market. Whilst he admits jobs are available, given his qualifications and experience, he still faces the challenge of securing one and as at the time of the assessment he was still unemployed. In the circumstances, I find that a reasonable period of notice to the instant claimant would be 12 months. He is entitled, therefore, to 12 months salary, which will include elements in the remuneration package to which he was entitled (monthly transport and duty allowances of $2, and $3, respectively). His damages for breach of contract will be $328, The sum of $25, which the defendant company paid to the claimant representing gross emoluments less taxes for one month will be deducted from this. This court also awards the claimant transport and duty allowances for 12 months in the sums of $33, and $36, respectively. Unpaid vacation 20. The claimant claims entitlement to $216, inclusive of PAYE being the sum payable in lieu of 144 days paid vacation, which he did not take. The claimant states in his evidence that the defendant company, by correspondence dated 8 th February, 2011, admitted that this sum was owed to him in lieu of outstanding vacation leave. In a second letter from the defendant company of same date captioned Letter of Agreement but unsigned by the claimant, he was offered this same sum as full and final settlement for all monies for vacation leave and all other benefits due and owing to him. This court is of the view that the sum of $216, represents only vacation pay to which he is also entitled. In the local decision of Reid v Marshall, Bertrand, Assam, Mendes, Boswell-Inniss and Trinidad Page 10 of 12

11 Aggregate Products Limited 15 under the heading Salary in lieu of vacation leave, Devindra Rampersad J awarded a sum of money as compensation for the 12 weeks vacation to which the plaintiff was entitled and did not take. In the same trend, I award the claimant the sum of $216, for 144 days vacation to which he was entitled and did not take. Gratuity 21. Clause 12 of the Agreement states that the Corporation shall pay to the person engaged 20% of his basic salary over his contract period contingent on the successful and satisfactory completion of his contract. The claimant claims gratuity of 20% on salary as well as on unutilized vacation leave. Halsbury s Laws of England Vol th Edition at paragraph 785 states, [A]ny additional sums, such as extra payments, bonuses or tips and gratuities are recoverable if contractually binding The Dominican case of Ducreay v Dominica Water Sewerage & Company Ltd DM 2004 HC 1 provided guidance with respect to this award. In that case, the Master Cottle awarded gratuity for the period the employee had actually worked as well as the period he would have worked had proper notice been given, which award was not taxed. In Trinidad and Tobago, however, gratuity is usually taxable. Following this trend, I award the claimant gratuity at the contractual rate of 20% on 12 months of salary ($328,800.00) as well as the nine month worked ($246,600.00) in the sum of $115, Taxes 22. The case of Waithe v Caribbean International Ariways Ltd (1988) 39 WIR 61 held that a sum should be deducted from the damages in respect of the income tax which would have been payable by the plaintiff on the emoluments which he would have received had he not been dismissed. In Reid (supra) Justice Rampersad opined, [T]here ought to be the proper deduction of taxes as per the applicable rate on those aspects of the award which are taxable. I am prepared to allow a deduction of 25% for taxes and other statutory deductions. The sum awarded for transportation is excepted. The calculations are as follows: 15 Reid v Marshall, Bertrand, Assam, Mendes, Boswell-Inniss and Trinidad Aggregate Products Limited HCA 3023/1995 Page 11 of 12

12 12 months salary = $328, Duty allowance = $ 36, Unpaid vacation leave = $216, Gratuity = $115, Sub Total = $696, Less 25% taxes and other statutory deductions = $174, $522, Plus transport allowance = $33, Less salary already paid = $25, TOTAL DUE $530, In the present matter, I find the claimant to be entitled to the sum of $530, Conclusion 24. It is hereby ordered that the defendant company do pay the claimant damages for breach of contract in the sum of $530, together with interest at the rate of 8% per annum from 13 th June, 2011 to 8 th January, 2013 and costs in the sum of $ Dated 8 th January, 2013 Martha Alexander Master Kimberly Romany Judicial Research Assistant Page 12 of 12