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Schutz v Television Kiribati Ltd [2017] KIHC 13; Civil Case 5 of 2014 (9 March 2017)

IN THE HIGH COURT OF KIRIBATI 2017

CIVIL CASE NO. 5 OF 2014

[KURT SCHUTZ PLAINTIFF
[
BETWEEN [AND
[
[TELEVISION KIRIBATI LTD DEFENDANT

Before: The Hon Chief Justice Sir John Muria

18, 20 & 27 May 2016

Ms Botika Maitinnara for Plaintiff
Ms Ereta Bruce for Defendant

JUDGMENT

Muria, CJ: The plaintiff’s claim in this case arose out of the cessation of the operation of the defendant’s business activities in 2012 due to financial difficulties. All the staff including the plaintiff, were laid off. There appeared to be some difficulty in the defendant paying redundancy benefits to its staff, including the plaintiff.

2. The plaintiff claims the following:
1. Unpaid leave grants
2. Unpaid leave
3. Unpaid wages
4. Unpaid redundancy package
5. Interest at 5% per annum from date of judgment until payment
6. Costs.

AGREED FACTS
3. There is no dispute on the facts in this case. It is agreed that the plaintiff was employed by the defendant and confirmed as permanent employee of the defendant on 6 January 2003. He was employed until January 2012 when he took his leave without pay. The defendant ceased operation in October 2012 due to financial difficulties and made its employees redundant. The plaintiff’s annual salary at the time of his redundancy was $9,000-00 per annum.

ISSUES
4. There is basically no dispute on the facts of the case. In fact both parties also agreed on the formula to be used in calculating the plaintiff’s redundancy entitlements. The only issue between the parties is on the interpretation or application of the formula.

5. The formula as provided in Clause 11.4 of the defendant’s Conditions of Service is:

Months of Service x 1.667 x annual salary
26

ARGUMENTS AND CONSIDERATION
6. Each party gave its own interpretation and application of the formula. As a result, the plaintiff’s application of the formula shows the amount $56,549.76 as his redundancy entitlement.

7. The defendant’s application of the rule shows that the plaintiff is entitled to redundancy payment of $5,872-00 less $3,865-60 (amount already received) leaving the balance of $2,006-40. In addition to the redundancy payment balance, the plaintiff is entitled to $1,750-00 leave grants, $3,150-00 unpaid leave and $145-00 unpaid wages, totaling
$7,051-40. Ms Bruce of Counsel for the defendant, thus submitted that the plaintiff is only entitled to $7,051-40 to be paid to him by the defendant in this case.

8. In view of the different applications, by the parties, of the provisions of Clause 11.4 of the plaintiff’s Conditions of Service, it is important to consider the terms used in the provision. Clause 11.4 provides, inter alia, as follows:

“An employee who has been declared redundant shall be paid a redundancy gratuity at the following rate:

Employee with 5 years service or less.

Not entitled to a redundancy gratuity.

Employee with more than 5 years service.

The redundancy gratuity shall be 1.667 working days pay for every completed calendar month of service based on the annual substantive salary of the employees at the time the employee is made redundant”. (Underlining added).

9. As already mentioned, the clause goes on to set out the formula in accordance with Clause 11.4 as:

Months of Service x 1.667 x annual salary
26

10. When one applies the formula as set out, it is not surprising to obtain the amount of $56,549-76, as stated by the plaintiff. But there is a flaw in the plaintiff’s application of the formula to calculate the redundancy payment. The plaintiff’s application of the formula ignores the fact that the plaintiff is only entitled to 1.667 working days pay for every completed calendar month of service as stated in Clause 11.4 of the terms and conditions of service.

11. In this regard, the Court prefers the defendant’s application of Clause 11.4 which shows that for every completed calendar month of service, the plaintiff is entitled to 1.667 working days pay. Thus a determination of the plaintiff’s daily pay is important in properly calculating his redundancy payment.

12. As the plaintiff’s annual salary was paid fortnightly, his fortnight pay must first be determined. His daily pay can then be worked out for the working days in a fortnight. The formula can only be properly applied once the plaintiff’s pay per day is ascertained in accordance with Clause 11.4.

13. It is arguable that the formula as set out at the end of Clause 11.4 does not correctly reflect the terms of that clause when calculating redundancy payments. Be that as it may, the terms of Clause 11.4 cannot be ignored.

14. Ms Bruce of Counsel for the defendant made the comparison with the formula for calculating the redundancy payment for public servants under the National Conditions of Service. The comparison is apt in this case.

15. To properly calculate the plaintiff’s redundancy entitlements in this case, the following must be taken into account: Annual Salary (defendant’s figure), $10,407-00; months of service (as agreed), 98; fortnight pay days in a year, 26 and 1.667 working days pay per completed calendar month of service.

16. Thus to properly apply the terms of Clause 11.4, I feel the plaintiff’s redundancy payment should be calculated as follows, giving him the benefit of a higher salary figure of $10,407-00 per annum as provided by the defendant rather than figure $9,000-00 as given by the plaintiff. The Court also accepts that the plaintiff had worked for 88 months as demonstrated by the defendant. Thus:

Salary = $10,407-00
Fortnight = $10,407-00 ÷26 = $400-27 fortnight
Per day = $400.27 ÷10 (working days) = $40-03 per pay
Working days pay = 1.667
Months of service = 88
Therefore 88 x 40.03 x 1.667 = $5,872-24
Redundancy Pay = $5,872-24
Less amount already paid = $3,865-61
Balance of Redundancy pay = $2,006-63

17. In the circumstances, I find that the plaintiff is entitled to redundancy payment in the sum of $5,872-24 less $3,865-61 which was already paid to and received by him. The balance of $2,006-63 redundancy pay is still due and owing to the plaintiff.

18. In addition, and as accepted by the defendant, the plaintiff is entitled to the following benefits:
Leave grant = $1,750-00
Unpaid leave = $3,150-00
Unpaid wages = $145-00
$5,045-00
I find that the plaintiff is entitled to and should be paid the above additional outstanding employment benefits in the sum of $5,045-00.

19. In the circumstances and on the evidence before the Court, I find that the defendant has still owed the plaintiff the sum of $2,006-63 being the balance of the plaintiff’s redundancy payment, together with the sum of $5,045-00 being outstanding employment benefits still owing to the plaintiff. The total sum owing to the plaintiff is therefore $7,051-63
($2,006-63 + $5,045-00) which should be paid to him without any further delay.

20. The plaintiff has also prayed for interest at the rate of 5% per annum. I feel in the circumstances of this case, the sum owing to the plaintiff should attract interest. The plaintiff should be entitled to 5% interest per annum on the amount owing to him for a long time.

21. Judgment is entered for the plaintiff in the sum of $7,051-63 together with interest at the rate of 5% per annum from the date of judgment until payment in full. The plaintiff shall also have his costs in this case to be taxed, if not agreed.

Order accordingly.

Dated the 9^th day of March 2017

SIR JOHN MURIA
Chief Justice

[The Court regrets the delay in delivering the judgment in this case. The delay is due to the case file being misplaced after the hearing of the case].