Loh v Pauanui Publishing Ltd
[2002] NZCA 128
•10 June 2002
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA278/01 |
| BETWEEN | PAUL LOH |
| Appellant |
| AND | PAUANUI PUBLISHING LIMITED |
| Respondent |
| Hearing: | 28 May 2002 |
| Coram: | Keith J Blanchard J Anderson J |
| Appearances: | M J Leggat for Appellant R O Parmenter for Respondent |
| Judgment: | 10 June 2002 |
| JUDGMENT OF THE COURT DELIVERED BY BLANCHARD J |
In January 2000 Mr Loh sought from his employer, Pauanui Publishing Limited (Pauanui), three weeks unpaid leave for an overseas holiday in February. He was not legally entitled to such leave. He indicated that he was determined to take the leave even if permission was refused. For reasons related to the cash flow of Pauanui’s publishing business leave was refused and Mr Loh was clearly warned in writing that if he insisted on going overseas there would not be a job for him when he returned. Mr Loh’s response was that he would be taking “extra leave” commencing in about three weeks time. The employer replied that Mr Loh was “deemed to have resigned”. Mr Loh went overseas in accordance with his expressed intention and there was indeed no job for him when he returned to New Zealand.
He brought a personal grievance claim against Pauanui for unjustifiable dismissal. The Employment Tribunal upheld this claim under the Employment Contracts Act 1991 (the Act) and awarded sums totalling $26,871.29 for reimbursement of lost remuneration and for compensation for humiliation, loss of dignity and injury to feelings, these sums reflecting a reduction of 25% for contributory fault.
On appeal by Pauanui to the Employment Court Chief Judge Goddard set aside the Tribunal’s decision and dismissed Mr Loh’s claim. He has appealed to this Court under s135 of the Act asserting errors of law in the Court’s decision. It is said that the Court failed to consider the only ground upon which Pauanui justified the dismissal, namely repudiation of the employment contract by Mr Loh, instead determining the appeal on the basis of serious misconduct by Mr Loh, which had not been put forward by Pauanui. It was further argued that the Court improperly overturned certain factual conclusions of the Tribunal and that the dismissal was procedurally unfair.
Facts
Mr Loh had worked for Pauanui for many years. It is the publisher of the weekly business newspaper, “The Independent”. Mr Loh held an important position as The Independent’s national advertising sales manager. At Christmas 1999 he took the usual period of annual leave. He also booked a three week overseas trip to commence on 7 February 2000 for himself and his wife. Mrs Loh was to have a major operation and apparently wished to visit a child living in Spain before this occurred. But Mr Loh did not tell Mr Berryman, the managing editor of the newspaper, of this intended trip until 11 January. This announcement provoked an exchange of correspondence over the next few days. On 12 January Mr Berryman said that there was no way the leave could be agreed to. He said that The Independent would be unlikely to survive it, mentioning financial difficulties which the paper had been experiencing. Mr Berryman could not in good conscience go to its financial backer and tell him that they had granted “our main ad salesman an extra three weeks’ leave two weeks after coming back to work after four weeks’ leave”. He pointed out that when Mr Loh had gone to Hong Kong “a couple of years back” advertising revenue had fallen off dramatically. His deputy on that occasion had proved unable to handle Mr Loh’s clients while he was away and, moreover, was no longer working for the company. Mr Berryman objected to having the matter sprung on him at the last moment, “just one week before everyone, including yourself, is due back at work after a month off”. The request was refused. In reply Mr Loh said that he could not plan the trip in advance because of a drop he had experienced in his income (relating to the setting of commissions). He mentioned his wife’s need to have time off to rest before her operation and the fact that he was selling his home with a settlement date of 31 January. He also mentioned his own poor health. On 14 January Mr Berryman reiterated the refusal to grant “an extra three weeks’ paid leave under the present circumstances”. He said that he and Ms McManus, the business editor, had “given this serious consideration” and he had set out his reasons in writing. It was “not negotiable”. The letter included a rebuttal of certain of the points made by Mr Loh and concluded:
If I allowed you to get away with this it would put the whole paper in jeopardy – and destroy morale.
On 16 January Mr Loh wrote pointing out that what he sought was three weeks unpaid leave but indicating that it was his intention to proceed with the trip and to return to the office “to resume my responsibilities on 2 March”. He said he would like to discuss urgently with Mr Berryman “the thoughts and ideas I have to cover the situation during my absence”.
Mr Berryman replied on 17 January in strong terms, indicating that he would not consider a request for paid or unpaid leave. The request was denied. He said that the amount of money which Mr Loh would or would not be paid for not working was not the issue. “The issue was the much larger amount of ad revenue we would lose while our main ad salesman is holidaying overseas”. He was not prepared to consider any of Mr Loh’s schemes for a replacement. He did not think they would work. Then he said:
If you insist on going overseas resign, go on holiday and take as much time as you like. There won’t be a job at this paper waiting for you when you return. I can’t afford to keep your position open for three weeks while you are on holiday. I have to put out a paper every week and meet the costs of doing so. I need ad revenue to do this.
To this, Mr Loh responded:
I wish to confirm I will not resign.
I also confirm that I will be taking extra leave on an unpaid basis from 7th February to 1st March.
I will resume my responsibilities from 2nd March.
Any purported termination by you of my employment will be treated as constructive dismissal.
Mr Berryman then sent a fax the same day saying that in light of Mr Loh’s refusal to work as instructed – as laid down in his employment contract – Pauanui could not continue employing him. By insisting that he have an extra three weeks holiday when Mr Berryman had made clear this was unacceptable to the company and its major creditor, “you are deemed to have resigned as from today”.
The Employment Tribunal
As the appeal asserts error of law by the Employment Court, it is necessary to mention only a few points from the Tribunal’s decision. The Tribunal found that there had been a dismissal. What had occurred did not amount to a repudiation “based on abandonment as there had been no abandonment at the time of the termination”. Mr Loh had not taken the leave before he was dismissed. There had been “no actual repudiation by the applicant prior to his dismissal”. Pauanui had not submitted that Mr Loh’s conduct amounted to misconduct justifying the dismissal “in the alternative that it was found not to be a repudiation”. There had been misconduct but it did not go to the heart of the contract such that it would have warranted summary dismissal. Mr Loh had expressed an intention to return to his job following the leave and had endeavoured to make arrangements for his work to be done during his absence.
The Tribunal also adverted to Mr Berryman’s suspicion that Mrs Loh’s operation was not the real reason for the leave request, saying that Mr Berryman should have put the suspicion to Mr Loh.
The Employment Court
Chief Judge Goddard confirmed the view of the Tribunal that Mr Loh had not resigned but had been dismissed. However, he disagreed with the Tribunal’s conclusion that there had been no actual repudiation. “It is common ground that this finding overlooks the doctrine of anticipatory breach and is therefore wrong”. Before the Court, Mr Loh had relied on the Tribunal’s alternative finding that Pauanui was not justified in treating the threatened breach as so serious that it went to the foundation of the contract.
The Chief Judge set out the grounds of appeal, the first of them being that the Tribunal had erred in fact and law in concluding that there was no repudiation by the respondent in the circumstances. He detailed the submissions of counsel and noted that it was not an appeal by way of rehearing but that the Court was entitled to differ from the Tribunal’s findings of fact after making full allowance for the advantage of the trial court in seeing and hearing the witnesses. He said that he accepted without question the Tribunal’s finding that Mr Loh did not tell or attempt to tell Mr Berryman of his plans to go on leave in February prior to 11 January. The Tribunal had drawn an inference that Pauanui was acting not from concern over Mr Loh’s projected absence but as a result of the wider complaints Mr Berryman had about Mr Loh and in response to pressure from Ms McManus. But, the Chief Judge said, these were not relevant considerations and it did not matter what Mr Berryman’s motives were if they included the commercial concerns to which he alluded more than once in communications with Mr Loh, in the absence of any finding that these were not concerns genuinely held (whether rightly or wrongly) by Mr Berryman.
The Chief Judge likened the situation to the facts of an English case decided by the Employment Appeal Tribunal (Michelin Tyre Co Ltd v Cooper (unreported, 10 February 1983, EAT 345-82)) in which the employee had articulated the reasons for requiring extended leave on compassionate grounds but the employer could not see its way clear to accommodating that request and made plain what the consequence would be if the employee followed through with his intentions. The Employment Appeal Tribunal had found in favour of the employer.
Chief Judge Goddard concluded that there was no reason to think that the respondent would have been dismissed but for the fact that he went on holiday against Pauanui’s wishes. He reviewed the facts, setting out verbatim the crucial written exchanges between the parties. He said that there was no sufficient basis for the Tribunal’s conclusion that Mr Berryman had failed to consider Mr Loh’s request with an open mind and accommodate it if possible. The Tribunal had in effect found that Mr Berryman had taken advantage of the situation for the purpose of ridding Pauanui of the burden of employing Mr Loh. The Chief Judge said that there was no sufficient basis for this conclusion. Nor did the Judge accept the validity in law of the Tribunal’s conclusion that, although the expressed intention to take leave in the face of the refusal to grant such leave could well be seen as misconduct, such misconduct did not go to the heart of the contract. The view which the Tribunal had taken of the conduct of the parties had been “more than generous” to Mr Loh. It could not be supported in law or on the facts of the case.
This appeal
In a sustained argument Mr Leggat sought to persuade us that the Chief Judge failed to grapple with the question of repudiation or anticipatory breach of contract by Mr Loh and had instead determined the appeal on the basis of unjustified dismissal for serious misconduct by Mr Loh, which basis had not actually been asserted on behalf of Pauanui in the Court. If we accepted this argument, Mr Leggat said, that would mean that the crucial issue on the appeal to the Court had not actually been determined by Chief Judge Goddard. In that circumstance, counsel said that he would have wished that this Court should remit the matter for determination by the Tribunal. However, the particular Tribunal member no longer holds office and Mr Leggat’s preferred course was therefore for this Court to make the necessary determination of whether there had been a repudiation by Mr Loh which was accepted by Pauanui.
Having considered the whole of the Court’s judgment, we are entirely satisfied that, although in the critical portion of his judgment the Chief Judge does not mention repudiation and the acceptance by Pauanui of an anticipatory breach of contract by Mr Loh, that was indeed the question which the Chief Judge was addressing. His understanding that he needed to do so is patent from the earlier portions of his judgment to which we have referred. He well understood that the issue was repudiation and that the Tribunal had misunderstood the concept of anticipatory breach. Although Mr Leggat is correct in saying that the English decision to which the Judge referred, Michelin v Cooper, was actually concerned with a dismissal for misconduct, we consider that the Judge mentioned it only because of the relative similarity of the factual situation, in which the insistence of an employee on taking unearned leave in the face of an objection from the employer was regarded as making it very reasonable for the employer to take the decision that it could not continue to employ somebody who blatantly disobeyed a reasonable order and to terminate the employment. It was a case in which, like the present, the conduct could be viewed as very serious misconduct amounting to a refusal to perform in accordance with the employment obligation. There is of course the distinction that in the English case the termination of the employment did not come about until after the employee actually absented himself, but we see nothing in the judgment below suggesting that the Chief Judge overlooked that point. Indeed, he proceeded carefully to trace the history of the correspondence between the parties and reached the conclusion that what Mr Loh did in confirming, in the face of Mr Berryman’s ultimatum, that he would be taking the extra leave was so serious as to go to the heart of the contract. That is indeed the view that we ourselves would have taken if we had come to the conclusion that the Chief Judge had failed to address the question of repudiation.
It was also well open to the Judge to take the view that what really motivated Mr Berryman was his concern for the financial health of the newspaper if its national advertising sales manager was unavailable at a crucial time in the New Year when, because of the prior temporary cessation of business over the holiday period, cash flow was not strong. This was also against a background of the newspaper’s poor financial performance in the latter part of the preceding year. It was not a situation in which Mr Berryman had to oblige Mr Loh by granting him additional leave. He had been caught by surprise by the very late request from an employee whose presence in February he plainly regarded as vitally necessary.
Nor is this a case in which it is apparent to us, on a reading of the evidence and the judgment below, that the Court rehearing the matter as a first appeal has failed to have proper regard to its function. It is evident that Mr Berryman may well have been unhappy about Mr Loh’s earlier performance of his job. He may also have been suspicious about the real reason why Mr Loh was wanting to travel overseas. But it is quite plain from the correspondence that his primary concern was for the financial well-being of the newspaper. Nor does it seem to have been of great moment to Mr Berryman whether the extra leave was on a paid or unpaid basis. His worry was that crucial advertising revenues would be lost. Mr Berryman could hardly have made that position plainer to Mr Loh, who clearly understood that if he insisted on taking the leave he would have his employment terminated. The seriousness of persisting with his intended course was brought home to Mr Loh but he elected to confirm in very direct terms that he would be taking the leave in defiance of Mr Berryman’s directive. In the circumstances it cannot be said that there was any procedural unfairness when Mr Berryman proceeded to notify the cancellation of the employment. The language which he used (of deemed resignation) was inaccurate but the legal significance was plain. It was a cancellation on the ground of Mr Loh’s anticipatory breach of contract.
Mr Leggat submitted, in the alternative, that there had been a procedural irregularity because Mr Berryman failed to tell Mr Loh of his suspicions about the asserted reason for wanting leave, namely Mrs Loh’s pending operation. But, as Mr Berryman’s real concern, as found by the Employment Court, was with the cash flow of the newspaper, any such suspicions he may have been harbouring were of very limited relevance. Mr Leggat accepted that if this Court confirmed, as we do, the substantive justification of the dismissal, any such procedural irregularity could, at best for his client, give rise to a claim for damages for additional distress. Even if we had been of the view that there was such an irregularity, we fail to see how additional distress could in the circumstances have been caused by any failure to disclose such suspicions about Mr Loh’s motivation.
Result
The appeal is dismissed. Costs on the appeal in the sum of $750 are awarded to Pauanui, that being the limit of the amount which Mr Loh has been required by the Legal Services Agency to contribute to the funding of his legally aided appeal.
Solicitors:
Ernst & Young Law, Wellington for Appellant
Daniel Overton & Goulding, Onehunga for Respondent
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