Ler Hock Seng and Others v Bethlehem Singapore Pte Ltd

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 09 February 1994
• Neutral Citation: [1994] SGHC 32
• Date: 09 February 1994
• Subject Matter: Benefits,Consistent course of dealing,Determination of 'current' or 'prevailing' practice,Retrenchment Payable in accordance with 'current' or 'prevailing' practice,Employment Law,Whether employer bound by previous practice,Whether discretion available to employer to determine current rate
• Docket Number: Suits Nos 345 and 532 of 1988
• Published date: 19 September 2003
• Defendant Counsel: Jude P Benny and Abbas Ali (Joseph Tan Jude Benny & Co)
• Court: High Court (Singapore)
• Plaintiff Counsel: Harbajan Singh (Daisy Yeo & Co)

Cur Adv Vult

In these consolidated suits, the plaintiffs seek the court`s determination of the amount of retrenchment benefits they were entitled to receive under their contracts of employment with the defendant company.

The facts

The company was incorporated in Singapore in 1969. It was a joint venture between the Bethlehem Steel International Corporation, an American corporation, and The Development Bank of Singapore, with the former holding the majority of the $15m paid-up shares. The company was in the shipbuilding and other marine and related businesses. It commenced business in 1970. It went into members` voluntary winding up in 1988.

Some of the company`s employees were members of a trade union, the Shipbuilding and Marine Engineering Employees` Union. The plaintiffs were not. They held supervisory, technical, secretarial and clerical positions and the like. They had been in the service of the company for varying periods. Most of them started from the early days of the company, in the early 70s. A few started in 1980. One started in 1982.

The dispute turns on the ascertainment and construction of the terms of the plaintiffs` employment. The starting point is the plaintiffs` letters of appointment. Not all of them have been produced. The ones available, in addition to providing for remuneration and CPF contributions, provide for `other benefits` as follows:

Variant 1:

You will be entitled to all other benefits applicable to your employment status in accordance with the company`s current policies and practices and subject to the provisions of any relevant law. [Emphasis added.]

Variant 2:

You will be accorded all other benefits applicable to your employment status in accordance with the current company`s policies and practices.[Emphasis added.]

Variant 3:

You will be entitled to all other benefits, including but not limited to retrenchment benefits, applicable to your employment status in accordance with the company`s prevailing policies and practices and subject to the provisions of any relevant law. [ emphasis added.]

The company accepts that all the plaintiffs are entitled to retrenchment benefits as a matter of right. The only argument is as to the amount of retrenchment benefits they are entitled to. Although slightly differently worded, it is common ground that all the provisions set out above have similar effect. In particular, no reliance is placed by either party on any distinction between `current` and `prevailing`. I can therefore proceed on the basis that all the letters of appointment had provided that the plaintiffs were entitled to retrenchment benefits in accordance with the company`s `current` or `prevailing` policy and practice. It is also common ground that there are no statutory provisions in relation to retrenchment benefits which are applicable. So, for present purposes, the words `subject to the provisions of any relevant law` may be disregarded.

Towards the end of 1987, the company decided to close down their operations.

On 3 November 1987, a collective agreement was signed between the Shipbuilding and Marine Engineering Employees` Union and the company under which all unionized employees with more than three years of service with the company were to be paid half a month`s basic wage for each year of service pro-rated for any incomplete year of service, subject to a maximum of five months` basic wages or $6,250, whichever was the less.

On 1 December 1987, the company sent retrenchment notices to all the plaintiffs, terminating their employment with effect from 31 December. The company also stated in the retrenchment notices that the plaintiffs would be paid retrenchment benefits at the rate and subject to the maximum which it had agreed with the union in respect of the unionized employees. In the event, the plaintiffs were paid $6,250 each.

They felt aggrieved. On 22 February 1988, three of them commenced action in Suit No 345 of 1988. On 16 March 1988, the other 42 plaintiffs commenced Suit No 532 of 1988.

On 22 April 1988, the directors filed a declaration of solvency preparatory to putting the company into members` voluntary winding up. The statement of affairs attached to the declaration shows a surplus of $5.24m of assets over liabilities. The Registry of Companies records show the effective date of the winding up as 11 May 1988. I assume that means the date of the meeting at which the necessary resolution was passed.

Past retrenchment exercises

The retrenchment exercise was the last undertaken by the company, but it was not the first. In answer to queries from the plaintiffs` solicitors, the liquidators` solicitors stated in a letter dated 16 November 1992 and I quote:

(1) The company carried out approximately ten retrenchment exercises in the past.

(2) The first of these was sometime in 1975 or 1976 and a few exercises were carried out in these years.

(3) These retrenchment exercises included both union and non-union employees.

(4) The benefits paid were one month`s pay per year of service for those with more than three years` service in all retrenchments except for the final retrenchment exercise when the yard was closed and sold at the end of 1987.

Thus, the company had carried out no less than ten (other) exercises since 1975 or 1976. The available documents show that there were five retrenchment exercises in various months in 1976 and one in January 1977. That accounts for six. It would be relevant to know when the other four retrenchment exercises took place. No documents relating to them were produced, and the company`s solicitors stated in their letter that the company`s records that were available did not contain the information. I must say this is quite surprising, and unfortunate. I would have expected a company of this standing to have a proper system of filing documents, particularly those concerning administrative, accounting and personnel matters.

As these actions were started in February and March 1988, before the company went into liquidation, I would also have expected the company or the liquidators, when faced with these court actions, to take special care to preserve the relevant documents. Instead, all that we have now is the far from precise statement of the company`s solicitors concerning these vital matters.

In the absence of direct evidence, I would do my best by turning to other indicators. I see from the accounts of the company that its annual profit after taxation picked up in 1978, and increased steadily in the following years until 1982, when it showed a slight drop, and 1983,...