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Carey v South Pacific Oil Ltd [2014] SBHC 129; HCSI-CC 354 of 2011 (17 October 2014)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction

BETWEEN:

STEPHEN ALAN CAREY
Claimant.

AND:

SOUTH PACIFIC OIL LIMITED
Defendant.

M. Pitakaka for the claimant.
P. Afeau for the Defendant.

Date of hearing: 8, 9, 17 September 2014
Date of judgment: 17 October 2014.

JUDGMENT

Apaniai PJ

Introduction.

1. The claimant, Stephen Allan Carey, claims against the defendant, South Pacific Oil Limited, damages for wrongful termination of his employment contract. He seeks a declaration that he was unlawfully or wrongly terminated; a further declaration that he was entitled to the salary, allowances and other benefits due to him under his contract of employment; aggravated damages and exemplary damages on the ground of the defendant's oppressive and arbitrary actions; damages for wrongful dismissal; interest on damages; costs; and, any other relieves as the court deems fit.
   
2. The claimant alleges that the termination of his contract was either wrongful or unlawful in that it was done in breach of the rules of natural justice because, as he says, he was not given the opportunity to be heard before an independent and impartial tribunal.
   
3. The defendant denies liability.
   

Facts:

4. The claimant was employed as Manager Aviation and QA Development with the defendant for five years effective from 5 March 2010 under a contract of employment ("Contract") executed on 24 April 2010. He was terminated on 22 July 2011, approximately 14 months into the contract period.
   
5. The reason for termination is said to be "serious misconduct and unprofessional behaviour detrimental to the company". The termination was based on a report dated 21 July 2011 produced by a panel ("Panel") appointed by the board of directors of the defendant following a complaint by Solomon Airlines Limited ("Airline") in an email sent to the defendant on 24 March 2011 about a delay in refuelling an Airline flight which was due to depart early morning that day. The delay in refuelling was caused by a break down in the refuelling pump owned by the defendant. The claimant was the manager in charge of refuelling aircrafts at the Henderson Airport and was informed of the breakdown of the pump but, it is alleged, he deliberately or negligently did nothing about the problem thereby causing a delay to the departure time of the plane for about 1 ½ hour.
   
6. In the email to the General Manager of the defendant, the Chief Executive Officer of the Airline stated in no uncertain terms that the Airline would no longer deal with the claimant. It appears that the Airline may have been fed up with the defendant's conduct towards it, hence, its decision to cease dealing directly with the defendant. The Airline is the defendant's biggest customer and, naturally, it was of great concern to the defendant if it were to lose the Airline as a customer.
   
7. Following the complaint by the Airline, the claimant was suspended with full pay on 25 March 2011 and an investigation was then carried out by the Panel into the conduct of the claimant. The investigation not only covers the incident on 24 March 2011 but also other alleged incidents relating to the claimant's conduct towards the Airline in his capacity as Manager Aviation and QA Development with the defendant. According to the Investigation Report dated 21 July 2011 ("Investigation Report"), the investigations involved an interview with the General Manager of the defendant, perusal of Airline records, perusal of the defendant's Policy Manual ("Manual"), assessment of the contract of employment between the claimant and the defendant ("Contract"), and, an interview with the claimant.
   
8. Before the interview with the claimant, the defendant was served with 4 charges of misconduct on or about 17 June 2011 and was requested to respond to the charges by 23 June 2011 and to appear personally before the Panel at 1pm on 24 June 2011[1].
   
9. The first charge alleges "display of serious misconduct by reason of dereliction of duty or neglect of duty pursuant to clauses 8 and 9 of the Contract as read with clause 10.18 of the Company Policy Manual ("Manual")". The particulars of the charge refer to various duties of the claimant under clauses 8(a) and 9 of the Contract and clause 10.18 of the Manual and ended with assertions as to how the defendant had failed to carry out those duties. They include assertions that the defendant had received reports and complaints from the Airline in the past several months about delays in refuelling aircrafts but had failed to properly address those reports and complaints by maintaining an effective system or strategy to address the reports, complaints and concerns or to properly maintain the refuelling equipments and machines.
   
10. The second charge also alleges "display of serious misconduct by reason of dereliction of duty or neglect of duty pursuant to clauses 8 and 9 of the Contract as read with clauses 5.7.2 and 5.7.3 of the Manual". The particulars of the charge refer to the duties of the claimant under clauses 8(a) and 9 of the Contract as well as clauses 5.7.2 and 5.7.3 of the Manual and ended with assertions as to how the claimant has failed to carry out those duties. The particulars also refer to the incidence on 24 March 2011 as an example of breach of duties by the claimant.
    
11. The third charge alleges "display of unprofessional conduct or unseemly behaviour on the part of the claimant in breach of clause 8(a)(ii) of the Contract". The particulars of the charge allege that the claimant, upon receipt of the complaint against him by the Chief Executive Officer ("CEO") of the Airline, commenced private criminal proceedings against the CEO in the Magistrates Court. It is alleged that by doing so, the claimant had conducted himself in unprofessional conduct or unseemly behaviour which posed the risk of losing an important customer. It is alleged that such behaviour is a breach of clause 8(a)(ii) of the Contract.
    
12. The fourth charge alleges "serious misconduct by reason of dereliction of duty or neglect of duty or refusal to obey reasonable order or gross insubordination under clause 8 of the Contract". The particulars of the charge state that the claimant, upon receipt of his suspension letter, refused to accept the suspension and questioned the authority of the General Manager of the defendant by requesting copies of the minutes of the Board Meeting of the defendant approving the suspension. The particulars also allege that the claimant did not accept any investigation by the defendant's board into the complaints against him and demanded an independent inquiry. The particulars further allege that the claimant had contacted the Board members of the defendant directly by email in relation to the charges against him. The particulars allege that such conducts and behaviours amount to a failure, neglect or refusal to accept and obey reasonable orders and decisions by the defendant or the defendant's policy on dealing directly with the defendant's directors and that such behaviour amounts to gross insubordination.
    
13. As requested by the Panel, the claimant had made a response to the charges under cover of a letter by Michael Pitakaka Law Chamber dated 23 June 2011[2]. He also appeared before the Panel, along with his lawyer, Michael Pitakaka, on 24 June 2011[3].
    
14. In relation to the failure of the pump on 24 March 2011, the claimant explained that the pump was a new one and that the breakdown occurred without warning. Further explanations were also given by the claimant in regards to the issues. It is not necessary for me to go through all the explanations given by the claimant in response to the charges. Suffice it to say that in his response to the charges, the claimant had denied all the charges and had given detailed explanations for denying the charges.
    
15. The Panel considered the material before it, including the explanations by the claimant, and made a recommendation that the claimant be terminated forthwith. The recommendation was conveyed to the defendant's board of directors for consideration by way of a Board Circulation Paper to which was attached a copy of the Report[4]. After considering the Report and the recommendation by the Panel, the Board accepted the recommendation and resolved that the employment of the claimant be terminated forthwith.
    
16. A letter dated 22 July 2010 was then issued to the claimant terminating his employment forthwith. I think the correct date of the letter should be 22 July 2011. The claimant was later paid his dues which comprised pay in lieu of notice as well as repatriation costs and other entitlements. The amount paid appears to be $158,230.03.
    

Issue.

17. The main issue in this case is whether the contract of employment of the claimant was wrongfully terminated.
    

Definition of wrongful dismissal.

18. Wrongful termination of contract occurs when the termination is done before the expiration of the period of the contract of employment for reasons outside those permitted by the contract. It is akin to wrongful dismissal. In Halsbury's Laws of England[5], wrongful dismissal is defined as "a dismissal in breach of the relevant provisions in the contract of employment relating to the expiration of the term for which the employee is engaged. "
    
19. In his book "Industrial Tribunal Law", at page 33, Professor R.W. Rideout said in relation to the word "wrongful dismissal" that the word "wrongful" indicates that the dismissal is in breach of the contract of employment.
    

Termination under the contract of employment.

20. The Contract of employment between the claimant and the defendant has 9 clauses. Clause 1 sets out the job title of the claimant while clause 2 describes the claimant's category of employment and clause 3 provides that the commencement date of the Contract is 5 March 2010. Clause 4 says that the duration of employment is five years and clause 6 refers to a probationary period (which does not apply). Clause 7 provides for issuing of disciplinary notices and clause 8 provides for termination of the Contract. Clause 9 sets out further conditions relating to wages, supply of tools, etc, for the claimant's job, housing, statutory deductions, travelling expenses, working hours, public holidays, workmen's compensation, use of employer's properties and damage to such properties.
    
21. Here, the Contract was terminated without notice pursuant to clause 8 a). That clause provides as follows:-
    

"8. Termination of Contract.

1. The Employer may immediately terminate this contract with no notice should the Employee:
   
   1. Display serious misconduct. Examples of serious are sleeping on duty, dereliction of duty, drunk on duty, stealing or fraud, using violence, corruption, refusal to obey a reasonable order, gross insubordination, disturbance of village peace and safety, deliberate pollution of waterways, or any conduct likely to endanger the lives and safety of one's self or others or which adversely affects the progress of the work.
      
   2. Display of unprofessional or unseemly behaviour that may be detrimental to the Company.
      
   3. Wilfully damage or deface Company property.
      

22. The Contract itself did not provide for the procedure to follow if the claimant is accused of displaying "serious misconduct" justifying dismissal without notice under clause 8 a). However, section 3.4.15 of the Manual provides for "Disciplinary & Termination Procedures"[6]. Under clause 9 i) of the Contract, the Manual applies as part of the Contract.
    
23. The claimant's case is that clauses 3.4.15.1 to 3.4.15.8 of the Manual were not complied with when the Contract was terminated. More specifically, he alleges that the complaint against him by the Airline was not investigated; that he was not given an opportunity to respond to the complaints; and, that the Panel which investigated the complaint was not impartial. I take note of the fact that nothing in his claim, nor in his evidence, shows that he disputes the seriousness of the charges. I therefore take it that the claimant accepts that the charges were serious cases of misconduct which would justify dismissal without notice as provided for under Step 4 (Dismissal/Termination of employment) of the Manual.
    
24. In regards to investigating complaints and affording an opportunity to be heard, the Manual provides in clause 3.4.15.3 that in any case where the disciplinary process is invoked, a number of principles will apply one of which is that the individuals involved in the process will be treated with respect and dignity at all times. The Manual further provides in that clause that no formal disciplinary action, such as a formal warning or dismissal, will be imposed without there first being an investigation to establish the facts, and the employee given the opportunity to respond to any allegations made.
    
25. Clause 3.4.15.4 of the Manual also requires an interview to be held with the employee under investigation (and for the employee to be accompanied by a Companion at the interview) and to give the employee an opportunity to explain the situation from his perspective. Where the breach is of a serious nature, the employee may be suspended on full pay until conclusion of the investigation.
    
26. The claimant also alleges that the Panel is not independent and impartial. The Panel consists of Mr. Josiah Manehia (Commissioner of Labour) as chairman, Mr. Peter Boyers (Chairman of the Investment Corporation of Solomon Islands 'ICSI') as member and a representative from GRP & Associates. The members were appointed by the defendant's Board of Directors to investigate the complaints against the claimant. However, the representative from GRP & Associates declined to take part in the investigations.
    
27. The claimant's objection to Mr. Manehia being on the Panel is based on Mr. Manehia's position as Commissioner of Labour. He says that any complaint regarding employment matters would be referred to Mr. Manehia as Commissioner of Labour, hence, his membership of the Panel would be inappropriate. In regards to his objection to Mr. Boyers, the claimant says that Mr. Boyers is the chairman of ICSI which owns the Airline, hence, he would be seen as not impartial since the investigation is the result of a complaint from the CEO of the Airline. He claims that the membership of these two persons on the Panel amounts to a breach of contract.
    
28. The first question is whether the termination was done in breach of the rules of natural justice. Two issues have been raised in regards to the alleged breach of natural justice.
    
29. First, the claimant says that no investigation was made into the complaints against him as required under the Manual. The Manual provides that in conducting an investigation, the nature of the matter under investigation must be made clear, the employee must be given the option of having a companion accompany him at the hearing, the employee must be provided with an outline of the circumstances or evidence found, and, the employee must be given the opportunity to explain the situation from his perspective.
    
30. Unfortunately, I do not accept the claimant's allegation. The Report shows that an investigation was carried out by the Panel by interviewing the General Manager of the defendant (which the claimant disputes), by the perusal of records belonging to the Airline, by consulting the Manual, by assessing the claimant's Contract of employment, and, by having an interview with the claimant.
    
31. It is not a requirement that the defendant must conduct an investigation or inquiry into the complaint in the same manner as a court trial. As was said by Professor Rideout[7], the employer in the conduct and management of its business, is not called upon to sit in judgment on an employee and require proof beyond reasonable doubt of alleged misconduct. When an incident occurs which raises the question of misconduct by an employee, the employer is required to act fairly in considering the interests of the employer's business and of the employee's employment in the business.
    
32. Obviously the employer who has a business to run cannot be expected to conduct a formal hearing in the nature of a trial but if the employer has not made reasonable enquires, the employee cannot be said to have had sufficient opportunity to answer the employer's complaint.
    
33. I am satisfied that sufficient inquiries have been made in this case. It follows that the assertion that no investigation was made into the complaints is not supported by the evidence. I reject the assertion.
    
34. Second, the claimant says that he was not given the opportunity to be heard. Again, I do not accept that allegation. The evidence clearly shows that the claimant was provided with a written copy of the four charges against him and he responded in writing to the charges[8]. Furthermore, he also appeared personally with his lawyer before the Panel on 24 June 2011 in connection with the charges. The assertion that he was not given the opportunity to be heard is against the weight of the evidence and I reject it.
    
35. Finally, the claimant alleges that the Panel was not impartial because of the membership of Mr. Manehia and Mr. Boyers as members of the Panel. He says that the inclusion of those two persons as members of the Panel amounts to a breach of contract because the Manual had provided for fairness to employees. I take it that this is a reference to the introductory words contained in clause 3.4.15.1 which provides:-
    

"Disciplinary guidelines and procedures enable an organisation to operate effectively by ensuring fairness and order in the treatment of employees. Guidelines establish standards of work, whilst procedures help to ensure that the standards are adhered to and provide a fair method of dealing with alleged breaches of the guidelines."

36. In my view, clause 3.4.15.1 is a statement of intent. It is that statement which forms the basis for such provisions as clause 3.4.15.3 (Principles) and clauses 3.4.15.4 (Disciplinary process) of the Manual. The evidence shows that these procedures have been followed. I therefore cannot accept the assertion that the inclusion of Mr. Manehia and Mr. Boyers as members of the Panel is unfair and amounts to a breach of contract. I see nothing wrong in law for an employer to appoint a person, or a group of persons, to carry out an investigation on its behalf into an allegation of misconduct and produce a report of the findings to the employer. It seems to me that as long as the employer, on the basis of the report, has a reasonably founded belief and honestly held, on the balance of probabilities, that serious misconduct has occurred, the employer is entitled to dismiss the employee.
    
37. In my view, the question for this court to answer in the present case is not whether the employee is guilty of the misconduct. Rather, the question is whether the court is satisfied that the employer reasonably believes that the employee is guilty of the misconduct. If the court is satisfied that the employer reasonably believes that the employee is guilty of the misconduct, a decision by the employer to dismiss the employee is unassailable.
    
38. In any event, the reasons given by the claimant to justify his fear of partiality on the part of Mr. Manehia and Mr. Boyers do not appear to me to be sufficiently strong to justify disturbing the decision by the defendant to dismiss the claimant.
    
39. It follows that this claim is dismissed and the claimant is to pay the costs of the defendant on standard basis to be assessed if not agreed.
    
40. Orders accordingly.
    

THE COURT

J. Apaniai
Puisne Judge

^[1] Refer to page 243, Court Book (Agreed) Vol. 2.
^[2] Ibid, p. 251.
^[3] See sworn statement by Stephen Allan Carey filed 1 May 2013, paragraph 31.
^[4] Ibid, exhibit “SC19”.
^[5] 4^th Edition, Volume 16(1B) at para. 697. See also King v Gold Ridge Mining Ltd [2009] SBHC 16; HCSI-CC 90 of 2009 (8 My 2009).
^[6] See pages 469 to 505, Court Book (Agreed) Vol 2.
^[7] Industrial Tribunal Law”, at page 33, Professor R.W. Rideout,
^[8] See paragraph 28, sworn statement by Stephen Allan Carey filed 1 May 2013.