Goh Joon Lian v Exxonmobil Singapore Private Limited

• Jurisdiction: Singapore
• Judge: Foo Tuat Yien
• Judgment Date: 12 April 2001
• Neutral Citation: [2001] SGDC 114
• Year: 2001
• Published date: 19 September 2003
• Citation: [2001] SGDC 114
• Court: District Court (Singapore)

JUDGMENT:

Grounds of Decision

Introduction

1. This is an appeal by the plaintiff , Goh Joon Lian ( hereinafter called Mr Goh ) against my decision on 3 March 2001 dismissing his appeal against the decision of the Deputy Registrar, Ms Laura Lau on 13 November 2000. The Deputy Registrar had dismissed his claim under Order 14 Rule 12 of the Rules of Court on the grounds that he is not entitled in law to the damages claimed for breach of contract by the defendants, Exxonmobil Singapore Pte Ltd (hereinafter called Exxonmobil ) in terminating his contract of employment without giving him the required one months notice.

Background

2. The material facts are not in dispute. Mr Goh was employed in a senior capacity as Retail Manager with a monthly salary of $16,300. He had been employed since 9 July 1979. Exxonmobil terminated his employment on 3 August 1999. He was told to leave immediately with less than one hour to pack his belongings. He was compensated for his unconsumed leave and given one months salary in lieu of one months notice. Mr Goh alleges that this sudden termination without notice was in breach of his contract of employment and damaged his reputation. Having to seek employment while unemployed subjected him to suspicion of having acted with impropriety while in the course of employment with Exxonmobil. He brought this action for damages for breach of the contract of employment. The defendants then applied under Order 14 Rule 12 of the Rules of Court asking that Mr Gohs claim be dismissed with costs on the grounds that he is not entitled, as a matter of law, to damages as pleaded in the Statement of Claim. The Deputy Registrar struck out Mr Gohs claim. I dismissed his appeal.

Issues

3. There are 2 issues in this case:

i. Was the manner of Mr Gohs termination with one months salary in lieu of one months notice in breach of the contract of employment ?

ii. Assuming a contract of employment provides that the contract is terminable only upon one months notice, is the proper measure of damages for failure to give that notice one months salary alone or is Mr Goh entitled to damages for financial loss for the manner of his wrongful dismissal, i.e. unemployment for 2 months and loss of income up to the date of writ and continuing, in having to accept a lower paying job (paying $3563.50 less per month) with less attractive benefits?

1^st Issue: Could Exxonmobil terminate Mr Gohs contract of employment by giving one months salary in lieu of one months notice ?

4. The relevant portion of the employment contract is as follows:

"During your period of employment with us, you may terminate your services with the Company by giving one months notice (excluding any accumulated leave) or compensation in lieu thereof, likewise the Company may terminate your services by giving one months notice and paying your salary for the time you have worked with us.

Mr Gohs counsel, Mr Andrew Hanam contends that, unlike Mr Goh, Exxonmobil could only terminate the contract of employment by giving one months notice and paying any accrued salary. In the termination clause, Exxonmobil did not say likewise the company may do the same but they went on specifically to state the manner of termination, which is only by giving one months notice. There are 2 components of salary earned by an employee - salary earned up to the notice of termination and salary during his one months notice. These 2 components are reflected in the clause, therefore Exxonmobils contention that they, like Mr Goh, could terminate the contract of employment by giving one months notice or one months salary in lieu of notice is not sustainable from the clear and express words of the clause. Further if there is any ambiguity in the interpretation of the clause, the contra proferentum rule should be applied. As the contract was drafted by Exxonmobil, any ambiguity would have to be resolved against them. Mr Hanam cites among others, the cases of Lim Kim Yiang and Anor v Foo Suan Seng and Ors [1992] 1SLR 573, Ho Miaw Ling v Singapore Island Country Club [1997] 3 SLR 892 and Hongkong and Shanghai Banking Corporation Ltd v Jurong Engineering Ltd and Ors [ 2000] 2SLR 54 as authorities for the application of the contra proferentum rule.

5. Exxonmobils counsel, Mr Nandakumar, contends that if Mr Gohs interpretation of the termination clause is accepted, that part of the clause beginning with the word likewise relating to Exxonmobils right to terminate would be inoperative and of no purpose. He argues that the word likewise denotes similarly or in like manner. Exxonmobil was already under an obligation to pay for whatever time Mr Goh had worked with them and this would include the time right up to the termination of employment after notice of termination had been given. He argues that the phrase paying your salary for the time you worked with us caters for the payment of salary in advance for the duration of the notice period. Further the fact the words earned or accrued have been deliberately left out after the word salary in the phrase indicates that payment of salary in advance is allowed under that clause. When an employer exercises his right to make payment in lieu of notice, he in effect dispenses with the services of the employee over the period of the notice. The phrase would have included payment over the notice period. The word and should be seen in this context and read together with the word likewise to give Exxonmobil the same 2 options to terminate the contract as were given to Mr Goh.

6. Mr Nandakumar contends that the contra proferentum rule is a rule of last resort and should be applied only after other applicable rules of construction are considered. In construing a contract: i) all parts of it must be given effect where possible and no part of it should be treated as inoperative or surplus; ii) the provision should be construed so as to render a reasonable result; and iii) that the reasonableness of the result of any particular construction is a relevant consideration in choosing between rival constructions.

7. Mr Nandakumar argues that Mr Gohs interpretation produces the unreasonable result of allowing only Mr Goh and not Exxonmobil to terminate by payment in lieu of notice. It could not have been the parties intention that Exxonmobil be denied the option to terminate by making payment in lieu of notice. This would mean that dismissed employees, including senior employees such as Mr Goh, would be at work even after dismissal, thus giving them access to confidential information and influence over the staff. This was against the commercial interests of Exxonmobil. In Wickam Machine Tool Sales Ltd v A.G. Schuler A.G. [1974] AC 235, House of Lords, Lord Reid said:

" The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result, the more unlikely it is that parties can have intended it and if they do intend it the more necessary it is that they shall make their intention abundantly clear."

Mr Nandakumar concedes that the termination clause could have been drafted in a clearer manner. It was not a case, however, where the clause had made it abundantly clear that only Mr Goh could be allowed to terminate by payment in lieu of notice. In Mitsui Construction Co Ltd v A.G. of Hongkong (1986) 33 Build LR 1, a Privy Council case, Lord Bridge at page 14 said:

" the poorer the quality of drafting, the less willing any court should be to be driven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention if the language used, whatever it may lack in precision, is reasonably capable of an interpretation which attributes to the parties an intention to make provision on a sensible and businesslike basis."

It would have been improbable and unbusinesslike of Exxonmobil to give Mr Goh the right to terminate by payment of salary in lieu of notice, while simultaneously depriving themselves of that right. Even if the contra proferentum rule were to be applied, the proferens ( ie the person for whose benefit the clause is inserted) needs to be identified so that the clause can be construed against that party. Unlike an exemption clause ( to which the contra proferentum rule is most often applied) a payment in lieu, does not operate solely for the benefit of one party. If the proferens cannot be identified, the maxim cannot be applied. In some cases, as is the case here, both parties would benefit from the relevant provision. A payment in lieu clause is beneficial to the employee in that he has a right to a specific sum of money if his employment is terminated immediately. It benefits the employer as he can dispense with the services of the employee immediately thereby removing the employees access to confidential information and staff.

8. Mr Nandakumar further contends that if from the language of the clause an inference may be drawn that parties must have intended the provision in question, the term ought to be implied. Where the term represents the obvious but unexpressed intention of the parties, the term may be implied under the officious bystander test evidenced by the use of phrases such as likewise and paying your salary. The fact that the mode of termination has been expressed does not preclude implying the term that Exxonmobil could terminate the contract of employment by payment in lieu of notice. An express term would only preclude the implication of a term if the term sought to be implied is inconsistent with the express term. That is not the case here. The use of the word likewise strongly suggests that it would be consistent with this contract to imply the term that Exxonmobil could, (as in Mr Gohs case), terminate the contract of employment by giving one months salary in lieu of notice.

9. It is clear that the objective in construing a contract is to ascertain the parties mutual intentions on their legal...