Wee Kim San Lawrence Bernard v Robinson & Company (Singapore) Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 07 August 2014
• Date: 07 August 2014
• Docket Number: Civil Appeal No 126 of 2013
• Court: Court of Appeal (Singapore)

Wee Kim San Lawrence Bernard

Plaintiff

and

Robinson & Co (Singapore) Pte Ltd

Defendant

[2014] SGCA 43

Sundaresh Menon CJ

,

Chao Hick Tin JA

and

Andrew Phang Boon Leong JA

Civil Appeal No 126 of 2013

Court of Appeal

Civil Procedure—Striking out—Contract of employment between employee and company providing for termination by payment of two months' salary in lieu of notice—Employee resigning from company—Company paying employee four months' salary in lieu of notice—Employee claiming against company for damages for constructive dismissal and breach of implied term of mutual trust and confidence—Whether claim for damages beyond amount of salary payable for contractual notice period was legally sustainable—Whether claim should be struck out—Order 18 r 19 Rules of Court (Cap 322, R 5, 2006 Rev Ed)

The appellant was a former employee of the respondent company. The appellant's employment contract allowed for termination by payment of two months' salary in lieu of notice. On 24 August 2012, the appellant resigned from the respondent. The respondent paid the appellant four months' salary in lieu of notice and the appropriate amount in cash for his unconsumed annual leave.

Subsequently, the appellant commenced a suit against the respondent, seeking damages for constructive dismissal. He claimed that he had been forced to resign as a result of persecution and bias directed towards him by the respondent. Alternatively, he claimed that the respondent had breached the implied term of mutual trust and confidence in his employment contract.

The respondent filed an application to strike out the appellant's suit, which was granted by an assistant registrar (‘the AR’). The appellant appealed to a High Court judge (‘the Judge’) against the AR's decision. The Judge dismissed his appeal, holding that even if he had been constructively dismissed, he would only have been entitled to two months' salary in lieu of notice as stated in his employment contract, and he had already received more than that.

The appellant then appealed against the decision of the Judge. He raised the following arguments on why his suit should not be struck out: (a) there was an arguable case that he was entitled to damages exceeding the amount of salary payable for his contractual notice period if such damages flowed from the breach of the implied term of mutual trust and confidence in his employment contract; (b) he was entitled to seek declaratory relief as to whether there had been a breach of the implied term of mutual trust and confidence that entitled him to resign; and (c) there was a conflict of evidence as to the nature and purpose of the respondent's payment of four months' salary to him.

Held, dismissing the appeal:

(1) An action would be legally unsustainable if it was clear as a matter of law that even if the party concerned were to succeed eventually in proving all the facts that he had to prove in order to establish his case, he would not be entitled to the remedy sought. This was one of the tests to determine whether a party's claim was plainly or obviously unsustainable such that it should be struck out under O 18 r 19 (1) (b) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed): at [21] .

(2) The concept of constructive dismissal and the implied term of mutual trust and confidence were distinct but closely related. A breach of the implied term of mutual trust and confidence by the employer would constitute a breach of a fundamental term of the employment contract, and an employee who accepted this breach as a repudiation of the contract would be treated as though he had been ‘constructively’ dismissed: at [23] and [24] .

(3) Where a breach of the implied term of mutual trust and confidence resulted in constructive dismissal, this would give rise to a claim for ‘premature termination losses’, ie, losses that were causally connected to the premature termination of the employment contract. The normal measure of damages in such cases was the amount which the employee would have received under the employment contract had the employer lawfully terminated the contract by giving the required notice or paying salary in lieu of notice, subject to mitigation: at [25] .

(4) Damages arising from a breach of the implied term of mutual trust and confidence could only be assessed on a separate footing where the consequence of the breach was something other than the premature termination of the employment contract, such as impairment of future employment prospects or other types of continuing financial losses. Such losses that flowed from a breach of the implied term of mutual trust and confidence were conceptually distinct from those resulting from the premature termination of an employment contract, and might therefore be recoverable in principle and liable to be assessed in an appropriate manner: at [26] to [28] .

(5) In the present case, it was accepted that the appellant's claim was only for financial loss arising from the premature termination of his employment with the respondent. As such, there was no reason to apply anything other than the normal measure of damages for wrongful dismissal. The appellant's claim for damages beyond the amount of salary payable for his contractual notice period was therefore legally unsustainable: at [22] and [36] .

(6) There were also difficulties with the appellant's suggestion that his loss should be assessed on the basis that his employment with the respondent would have continued indefinitely in the absence of evidence that the respondent would have exercised its right to terminate the employment contract at the earliest opportunity. It was implicit in the nature of a claim for constructive dismissal that had the employee not resigned, the employer would have terminated the employment contract at the earliest date at which it could lawfully do so. Moreover, the appellant's suggestion was incompatible with the well-established principle that there was no right to specific performance of an employment contract and was contradicted by his own pleadings: at [37] to [40] .

(7) The appellant's argument that he was entitled to seek a declaration that the respondent had breached the implied term of mutual trust and confidence was without merit. Apart from the fact that the appellant did not seek declaratory relief in his pleadings, there was also no ‘real controversy’ to warrant pursuing any form of declaratory relief since he had no legally sustainable basis to claim anything more than what he had already received: at [42] and [43] .

(8) The appellant's argument that his claim should not be struck out since there was a conflict of evidence as to the nature and purpose of the respondent's payment of four months' salary to him was equally untenable. The writ of summons itself suggested that this payment was part of a settlement agreement negotiated between the parties. Moreover, it was not disputed that this payment was in respect of the amount he would have collected for the period for which he would, pursuant to an alleged agreement, stay on with the respondent after his resignation: at [45] .

[Observation: The House of Lords in Johnson v Unisys Ltd[2003] 1 AC 518 held that the implied term of mutual trust and confidence did not apply in wrongful dismissal cases such that a claim for ‘stigma’ damages could not be made where the basis of the action was wrongful dismissal. This ‘Johnson exclusion’ had been subsequently reaffirmed in English law. However, there was no authoritative view on the applicability of the ‘Johnson exclusion’ in Singapore: at [33] and [34] .]

Alexander Proudfoot Productivity Services Co S'pore Pte Ltd v Sim Hua Ngee Alvin [1992] 3 SLR (R) 933; [1993] 1 SLR 494 (folld)

Arokiasamy Joseph Clement Louis v Singapore Airlines Ltd [2002] 2 SLR (R) 924; [2002] 4 SLR 794 (folld)

Arul Chandran v Gartshore [2000] 1 SLR (R) 436; [2000] 2 SLR 446 (refd)

Bunga Melati 5, The [2012] 4 SLR 546 (folld)

Chan Miu Yin v Philip Morris Singapore Pte Ltd [2011] SGHC 161 (refd)

Cheah Peng Hock v Luzhou Bio-Chem Technology Ltd [2013] 2 SLR 577 (refd)

Cockburn v Alexander (1848) 6 CB 791 (refd)

Commonwealth Bank of Australia v Barker (2013) 214 FCR 450 (refd)

Eastwood v Magnox Electric plc [2005] 1 AC 503 (refd)

Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2012] 2 AC 22; [2012] 2 All ER 278 (refd)

Gunton v Richmond-upon-Thames London Borough Council [1981] Ch 448 (refd)

Jerome Francis v The Municipal Councillors of Kuala Lumpur [1962] 1 WLR 1411 (folld)

Johnson v Unisys Ltd [2003] 1 AC 518 (refd)

Karaha Bodas Co LLC v Pertamina Energy Trading Ltd [2006] 1 SLR (R) 112; [2006] 1 SLR 112 (folld)

Lim Tow Peng v Singapore Bus Services Ltd [1974-1976] SLR (R) 673; [1975-1977] SLR 180 (folld)

Malik v Bank of Credit and Commerce International SA [1998] AC 20 (refd)

Semana Bachicha v Poon Shiu Man [2000] 2 HKLRD 833 (refd)

Shaw v State of New South Wales (2012) 219 IR 87; [2012] NSWCA 102 (refd)

Tan Eng Hong v AG [2012] 4 SLR 476 (folld)

Teh Guek Ngor Engelin née Tan v Chia Ee Lin Evelyn [2005] 3 SLR (R) 22; [2005] 3 SLR 22 (folld)

Western Excavating (ECC) Ltd v Sharp [1978] QB 761 (folld)

Wong Leong Wei Edward v Acclaim Insurance Brokers Pte Ltd [2010] SGHC 352 (refd)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 18 r 19 (consd) ;O 18 r 19 (1) (b)

Paul Tan (instructed), Choo Zheng Xi (Peter Low LLC) for the appellant

MKEusuff Ali, Megan Chia and Lucinda Lim (Tan Rajah & Cheah) for therespondent.

Sundaresh Menon CJ

(delivering the grounds of decision of the court):

Introduction

1 This appeal arises from an application to strike out a claim for damages for constructive dismissal and, alternatively, breach of the implied term of mutual trust and confidence in a contract of employment. The key issue in this appeal concerns the extent of damages that can theoretically be claimed in such circumstances.

Background...