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Burns Philp (Vanuatu) Ltd v Maki [1989] VULawRp 2; [1980-1994] Van LR 458 (12 July 1989)

[1980-1994] Van LR 458

IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU

CIVIL JURISDICTION

Appeal Case No. 8 of 1988

BETWEEN:

BURNS PHILP (VANUATU) LIMITED
(Appellant)

AND:

DONALD JOHN MAKI
(Respondent)

Coram: Chief Justice Cooke
Goldsbrough J.

JUDGMENT

[EMPLOYMENT - severance allowance - STATUTES - retrospective application]

Per: Goldsbrough J

This appeal arises as a result of the decision of the Supreme Court delivered on 21st October 1988 which concerns the interpretation of the provisions of the Employment Act No 1 of 1983 in relation to the payment of severance allowance.

Prior to the commencement of the Act on 30th May 1983 there had been no provision for payment of severance allowance. It was introduced by section 54 of the Employment Act No 1 of 1983 which provides:

"Subject to section 55, where an employee has been in continuous employment for a period of not less than 12 months with an employer and the employer terminates his employment or retires him on or after his reaching the age of 55, the employer shall pay severance allowance to the employee".

The decision of the Supreme Court questioned relates to the calculation of the amount of severance allowance, which is to be calculated in accordance with section 56 of the Act, subsection 1 of which provides:

"Subject to the provisions of this Part, the amount of severance allowance payable to an employee shall be calculated in accordance with subsection 2".

Subsection 2 provides:

"Subject to subsection (4) the amount of severance allowance payable to an employee shall be:

• (a) for every period of 12 months:
  • (i) half a month's remuneration, where the employee is remunerated at intervals of not less than one month;
  • (ii) 15 days remuneration, where the employee is remunerated at intervals of less than one month;
• (b) for every period less than 12 months, a sum equivalent to 1/12 of the appropriate sum calculated under paragraph (a) multiplied by the number of months during which the employee was in continuous employment."

The question which was asked of the Supreme Court (and its answer which is the subject of this appeal) was whether in calculating the amount of severance allowance in accordance with section 56 of the Act account should be taken of any period of employment prior to the commencement of the Act. The answer to that question given by the Supreme Court was that a period of employment prior to the commencement of the Act should be taken into account.

The facts of the case are agreed facts. It is therefore unnecessary to set them out here.

The appellant in this case argues that the Supreme Court erred in law in its interpretation of the Act. He maintains that the interpretation given to the Act by the Supreme Court renders the legislation retrospective and that without clearly expressed intention, which he maintains is absent, legislation should not be so construed.

The respondent in this case argues that the effect of the interpretation adopted by the Supreme Court is not such as to suggest that the legislation is retrospective merely because the period to be used in calculating severance allowance due may include a period of service prior to the commencement of the Act.

In support of his argument the respondent cites R v. St. Mary, Whitechapel (Inhabitants) [1848] EngR 746; [1848] 12 QB 120 in which Lord Denman CJ said:

"It is not properly called a retrospective statute because a part of the requisites for its action is drawn from time antecedent to its passing."

and also Master Ladies Tailors Organisation v. Minister of Labour [1950] 2 All ER 525 where the court held that the effect of a provision relating to accrued remuneration being merely to determine and limit the quantum of payments to be made after the order came into force should not be construed as retrospective legislation.

He further maintains that even should the court construe the legislation as being retrospective, then that must have been the clearly expressed intention of the legislature when the Act as a whole is read, citing in particular provisions in relation to holiday and sick leave.

On behalf of the appellant it was submitted that the extended definition of the relevant time period was contrary to the legal principles governing statutory interpretation and that such an interpretation did not follow from a proper reading of the Act. He maintained that any interpretation other than that providing for the calculation of the relevant period for severance allowance to begin with 30th May 1983 had the effect of making the legislation retrospective.

He further maintained that as the concept of "continuous employment" was only introduced by the Act that there could not have been "continuous employment" before that Act came into force which could be taken into account in calculating severance allowance.

He submitted that the Master Ladies Tailors Organisation v Ministry of Labour case cited in the Supreme Court should be distinguished from the instant case.

This Act established new rights for employees in holiday and sick leave as well as severance allowance. Because of the transitional provision contained in section 80 those rights are written into contracts of employment which came into force prior to the commencement of the Act.

It would be onerous indeed were the Act to provide that severance allowance should be calculated from a date prior to the passing of the Act. Although the Legislature has the power to impose such a liability on employers, if it choses to do so it must make it extremely clear that this is what it seeks to do. A simple sentence would suffice.

That clear language cannot be found in the Act. This case can be distinguished from Master Ladies Tailor's Organisation and another v Ministry of Labour and National Service in that this instant case deals with the principal Act itself and not an order made under it several years after the principal Act.

To find that severance allowance should be calculated from a date prior to the commencement of the Act would introduce a concept which cannot be found in the Act itself.

This appeal should therefore succeed and the court orders accordingly.

Per Cooke J;

In the interpretation of any statute it must be read as having effect from the date of its commencement. If it was intended that any past employment prior to the coming into force of the Act should be considered it should have categorically so stated. The Act does not state such, therefore the benefit to an employee is only effective from the date of the Act. However, a provision is made by s. 80 that all contracts of employment prior to the commencement shall be considered if an employee is in continuous employment for not less than 12 months and if so, he shall be entitled to the benefit of severance pay for that period (s.54 ). This, I contend is the sensible approach to the interpretation of the Act. If the Legislative intended that the employee should be paid for the "X" number of years the employee was employed prior to the Act, in my opinion, it would have so stated. I regret I cannot see any similarity between the case under reference and the case of Master Ladies Tailors Organisation and another v. Minister of Labour and National Service [1950] 2 KBD 525 referred to in the Acting Judge's Judgment . In that case, the minister by virtue of his powers under the Wages Council Act 1945 s. 10 made a holiday remuneration order which came into force on August 15th, 1949 which provided that stated holiday remuneration was to be paid to the worker during the period of 12 months commencing May 1st, 1948 and thereafter in each successive period of 12 months. In that case the order and the period when the holiday pay was to commence were made after the date the Act came into force hence it could not be said that the commencement of the holiday pay prior to the order was in any way retrospective.

In the appeal, if the severance allowance was permitted for "X" years prior to 30th May, 1983 it would in my opinion be retrospective and bad. I end by quoting what was said in the afore-mentioned case: "It has, of course, been laid down in the clearest possible terms that no statute or order is to be construed as having a retrospective operation unless such a construction appears very clearly or by necessary and distinct implication in the Act."

I agree entirely with the construction place on the Act by Goldsbrough J.

Appeal allowed.

Dated at Vila this 12th day of July 1989.

FREDERICK G. COOKE JUDGE
CHIEF JUSTICE COURT OF APPEAL