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REPUBLIC OF TRINIDAD AND TOBAGO

IN THE HIGH COURT OF JUSTICE

CLAIM NO CV 2011-02123

BETWEEN

VINCENT LYNCH

Claimant

AND

PUBLIC TRANSPORT SERVICE CORPORATION

Defendant

********************************************** Before: Master Alexander 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, 1991. 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 21st

May, 2010 the claimant signed a contract of employment (hereinafter “the said contract”)

with the defendant company effective 1st April, 2010 to serve as Director, Transition and

Infrastructure until 30th March, 2012. Pursuant to the said contract, he was entitled to a

monthly salary of $27,400.00 for the contractual period in addition to benefits stated therein.

2. On 23rd December 2010, the claimant received a letter stating that his engagement was

terminated with immediate effect. The letter further indicated that the defendant company

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was relying on Clause 6 of the Schedule of the said contract (reproduced below) in effecting

termination.

3. By letter dated 29th 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 14th March, 2011 and 11th May, 2011, to which no response was made.

These proceedings were thus instituted on 6th June, 2011. 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 30th January, 2012. 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 Baxendale1. See also Victoria

Laundry (Windsor) Ltd v Newman Industries2 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 341 2 Victoria Laundry (Windsor) Ltd v Newman Industries [1949] 2 KB 528, 537-538

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(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, 2011.

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 28-010 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 Ltd3, 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.

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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.

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10. To determine this issue, this court turned to the evidence of the claimant. He states that on

23rd 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 Globe4 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 Shroff5 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 67 @ page 74

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12. Of note also is the statement of Sir John Donaldson in Yorkshire Engineering and

Welding Company Limited v Burnham6 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 Limited7 as taken from Hepple and

O’Higgins’ Employment Law 2nd 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 1179 7 Satnarine Bunsee v Alstons Building Enterprises Limited HCA no 5953 of 1988

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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.

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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 Limited8,

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 Industries9 – 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 Company10 - 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 Limited11 – 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 1989 9 Gillespie v Bulkley Valley Forest Industries (1973) 30 DLR (3d) 586 10 Chadburn v Sinclair Canada Oil Company (1966) 57 WWR 477 11 Duncan v Cockshutt Farm Equipment Limited (1956) 19 Western Weekly Reports 554 (Maitob)

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Grundy v Sun Printing and Publishing Associates12 – 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 Limited13 – where

a director of a company with 20 years’ service was entitled to 12 months’ notice.

Mohammed Rahaman v Industrial Gases Limited14 – 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 1977 13 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

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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 $2,800.00 and $3,000.00 respectively).

His damages for breach of contract will be $328,800.00. The sum of $25,600.00 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 $33,600.00 and $36,000.00 respectively.

Unpaid vacation

20. The claimant claims entitlement to $216,780.91 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 8th 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 $216,780.91 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

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Aggregate Products Limited15under 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 $216,780.91 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. 41 5th 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 $115,080.00.

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

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12 months salary = $328,800.00

Duty allowance = $ 36,000.00

Unpaid vacation leave = $216,780.91

Gratuity = $115,080.00

Sub Total = $696,660.91

Less 25% taxes and

other statutory deductions = $174,165.23

$522,465.68

Plus transport allowance = $33,600.00

Less salary already paid = $25,600.00

TOTAL DUE $530,495.68

23. In the present matter, I find the claimant to be entitled to the sum of $530,495.68.

Conclusion

24. It is hereby ordered that the defendant company do pay the claimant damages for breach of

contract in the sum of $530,495.68 together with interest at the rate of 8% per annum from

13th June, 2011 to 8th January, 2013 and costs in the sum of $49.199.55.

Dated 8th January, 2013

Martha Alexander

Master

Kimberly Romany

Judicial Research Assistant