055-NLR-NLR-V-33-FORSYTH-v.-WALKER-AND-CLARK-SPENCE.pdf
Forsyth v. Walker and Clark Spence.
211
1931Present: Macdonell C.J. and Garvin S.P.J.FORSYTH v. WALKER AND CLARK SPENCE.
406—D. 0. Galle, 29,137.
Contract of service—Employment for definite period—No provision for termi-nation on notice—Repudiation before termination—Wrongfuldismissal—
Cause of action.
Where a contract of employment, entered into for a definite period,contains no provision for termination on notice and is not subject to. any custom as to notice, the repudiation of the – contract by the employerbefore the expiration of , the period, without lawful' excuse, amounts towrongful dismissal.
T
HE plaintiff sued the defendants to recover Rs. 6,000 as damagessustained by reason of the discontinuance of his services by the
defendants without reasonable notice.
The plaintiff was employed as . an engineer by the defendants on athree years' engagement in May, 1926, on a salary of Rs. 650 per mensem.On the expiration of the term, the -plaintiff was re-engaged in May, 1929,for a period of four years on a salary of Rs. 800 -per mensem for the firsttwo years and a salary of Rs. 850 per mensem for the next two years.On August 2, 1930, the defendants wrote to plaintiff that they wereunable to employ his services after September 30, 1930. The plaintiff
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MACDONELL C.J.—Forsyth, c. Walker and Clark Spence.
computed his damages by asking ior six months’ pay at Bs. 800 per mensemin lieu of notice. The learned District Judge awarded three months*pay and allowances as damages to the plaintiff.
N.E. Weerasooria, for plaintiff, appellant.—The main question is asto the terms of the second contract. The parties are agreed as to theperiod of service and the salary and even as to the quantum of houseallowances. But no period of notice is stated. The dismissal * waswrongful. The plaintiff was ready and willing to work but the defendantcompany was unable to give employment. The agreement was forfour years' service1. Six months’ salary and house allowance is reason-able damages (Gringer v. The Eastern Garage, Ltd1; 10 Halsbury,- p. 339,
$ 624).
[Garvin S.P.J.—Can a contract for a definite period without a provisionfor notice be terminated by notice ?]
Xo. The point has not been expressly considered in Gringer v. TheEastern Garage, Ltd. (supra). In Perera v. Theosophical Society1 2 3 sixmonths’ salary was taken as the basis of damages.
[Macdonell C.J.—In re Arbitration Rubel Bronze and Metal Go. Ltd.9supports the view that the contract is not terminable by notice.]
Yes. Unless a definite custom can be proved (English and Empire'Digest, Vol. 34, p. 66, §' 420, and p. 103, § 767-769; 20 Halsbvry,pp. 110-113, §§ 215-218; Bryant v. Flight4; Davis v. Marshalls; Smithv. Thompson*).
H. V. Perera, for defendants, respondents.—The two contracts mustbe read together. The second was a continuation of the first withslight variations. At the commencement of his employment the plaintiffagreed to the usual conditions of service appearing in a printed formexcept in regard to notice. The agreement a6 to notice was three months.The same period must be read into the second contract (Meek v. Portof London Authority7). Even if the parties later, sought to impose adifferent construction, that is immaterial. The question is merely oneof legal interpretation of the documents. The ‘trial Judge finds that theparties intended to incorporate the terms of the old contract. Thatwould include the period of notice, viz., three months.
Weerasooria, in reply.—The evidence is clear that the second contractwas distinct from the first. The defendant Company admits -in theanswer that no period of notice was agreed on. In the evidence theysay one month’s notice and not three months’ was enough. Meek v.Port of London Authority (supra) refers in fact- to a custom.
November 27, 1931. Macdonell C.J.—
In this case the plaintiff-appellant sued the defendant-respondentsfor Rs. 6,000 as damages sustained by him owing to the discontinuanceof his services by the defendants without reasonable notice. He arrives
1 (1929) 32 N. L. R. 281.4(1839)M. <b W. 114.
* (1930) S. C. 281, D. C. Colombo, 32,307,6(1861)4 L. T. 216.-
S.C. M. 18. 12. 30.•(1849)8 C. B. 44.
3 (1918) 1 K. B. 316.’(1918)2 Ch. 96.
MACDOKELIi CJ.—Forsyth ©. Walker and Clark Spence.21&
at this figure by taking six months' pay at Bs. 800 per mensem, sixmonths* house allowance at Bs. 70 per mensem, and six months* earningson the car allowance made him by the defendants at Bs. 130 per mensem,and over and above the Bs. 6,000 be claimed a Bibby Line passage toEngland which is agreed to amount to Bs. 891. Judgment passedfor him in the District Court but only for three months’ pay and houseallowance in lieu of notice. He was’ also granted the passage allowanceclaimed. From this decision he appeals.
The facts were these. The plaintiff was engaged ♦by the defendantsas an engineer in May, 1926, on a three years* engagement at a salaryof Bs. 650 per mensem. The defendants have a printed contract formwhich they usually get theiv employees to execute by which form thedefendants can terminate the engagement entered into by one month'snotice, and by which also they undertake on satisfactory completionof the particular agreement to give the employee engaged a second classpassage to England if the latter claims the same within thirty days ofthe termination of the agreement, but the plaintiff never signed thisprinted form. A copy was sent to him by the defendants and in replyhe asked that three months might be substituted as the period of noticein lieu of the one month in the printed form. To this the defendantsassented in a letter of May 10, 1926, adding, “the other terms and condi-tions appearing in the agreement which has been sent you will hold”.The plaintiff entered on his duties at Galle under this agreement andthings went smoothly between him and defendants. During the courseof this three years’ engagement he asked of the defendants and obtainedfrom them a house allowance of Bs. 70 per mensem. This was not aterm in the engagement and was really an ex gratia concession by thedefendants. The plaintiff also received a car mileage allowance, likewisea concession. In May, 1929, at the end, that is, of the three years’engagement, plaintiff engaged with defendants to serve them againas ah engineer but for a period of four years and this time, at a salaryof Bs. 800 per mensem for the first two years and Bs. 850 per mensemfor the second two years. He was then provided with a Bibby boatpassage to England and six months’ full pay. Later on in that year,1929, he returned here to take up his duties under the four years* contractwith defendants. This again was not a contract in writing but it iscommon cause that a return passage of Bibby boat at the conclusion ofthe engagement was a term -of it, and likewise the plaintiff drew thehouse allowance and car allowance just as he had done under.the threeyears* engagement, and there is evidence to show that these were actuallyterms of the new contract. Again things seem to have gone smoothly,and defendants expressly disclaim any default in diligence or skill onthe part of the plaintiff in the carrying out of his duties ^under thiscontract.
On August 2, 1930, defendants wrote to the plaintiff that on accountof business depression they had decided that they “ were unable toemploy his services after September 30, 1930 and they asked him toaccept that notice, in effect, a notice of one month, since apparentlybe was paid on the 1st of each month. After some correspondenceplaintiff commenced the present action.
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MACDONELL C.J.—Forsyth v. Walker and Clark Spence
In paragraph 5 of his plaint plaintiff sets out the facts of his re-engage-ment with the defendants in May, 1929, for a period of four years atEs. 800 per mensem for the first two years and Es. 850 for the secondtwo years and adds “ but no agreement was made as to the period ofnotice necessary to terminate the agreement This paragraph of theplaint is expressly admitted by the defendants in their answer. Theonly evidence bearing on the questibn of notice is this. Plaintiff in aletter of September 13, 1930, that is to say after he had been told thatbis services were dispensed with, wrote to defendants saying that theyhad dismissed him practically at a month’s notice and drawing theirattention to the letter of May 10, 1926, which had given him the rightto three months' notice under the earlier three-year agreement. Intheir reply of September 23, 1930, defendants said, “As regards his(i.e., plaintiff’s) contention of three months’ notice being required underthe agreement, as this agreement is now terminated its conditions areno longer in force.” This was a pretty clear statement on their partthat in September, 1930, 11idid not consider that their contract madefifteen months before, in May, 1929, could be implied to contain a condi-tion that it was terminable on three months' notice. At the trial theonly witness called for defendants said he considered that they wereentitled* to terminate the contract on one month’s notice. At the appealit was argued for defendants that the question was, what was the contract. itself, not what- were the opinions given on it some fifteen months afterit was made, and it was further -argued that the contract sued on was acontinuation of the first contract of May, 1926, and that consequentlyit impliedly took over from the first contract a condition of terminabilityon three mouths’ notice. But this argument seems doubtful.
The contract sued on was for four years at a higher rate of pay a:against one for three years at a lower rate, bo far then the contractsued on does not look to be a continuation of the old one. It is urgedthat the condition of the Es. 70 per mensem house allowance was commonto both. But the evidence shows that this allowance was not a termin the earlier contract but an ex gratia concession, and in their pleadingsdefendants say that it was not a term in their second contract eitherbut again a concession withdrawable at will. Even if it was a termin this second contract sued on£ it certainly -was not on the evidence aterm in the earlier contract, and therefore is not an argument in favourof the contract sued on being a continuation of the former contractand this is so a fortiori if it was not a term in either contract. It isequally difficult to use the promise of a passage as an argument in favourof continuity of one Contract with the other. According to the printedform which was expressed to govern the earlier contract,, the passagepromised was a second class one, but in actual fact a Bibby passagewas given, again something dehors that, the earlier contract, and if thepresent contract, the one sued on, contains, as seems conceded, thepromise of a Bibby passage, then this is something not to be found inthe earlier, three-year, contract. It is difficult then to hold that thecontract sued on is a continuation of the earlier contract and, if so, thecondition of terminability on three months’ notice cannot be read intoit as an implied term. Then we are thrown back on the evidence of
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MArDONBfilj r.J.—Forsyth v. Walker and Clark Spence.
the defendants themselves, their letter of September 23, 1930, to .theeffect that there cun be no argument from the one contract to the otheras to .three months’ notice, and the statement of their witness that theycould terminate it on one month’s notice—-not a very reasonable assertionas to a four-year agreement.
Of the issues framed the first three are the important ones: —
“1. Were defendants entitled to terminate the second contractbefore the expiration of four years ? ”*
The answer to this was “ Yes.”
** 2. If so, should defendants have given reasonable notice ?
“ 3. What is reasonable notice
The answer to these two issues was “ Three months’ notice is sufficienton the contract or as reasonable notice
Now on the pleadings it is admitted that no agreement was madeas to the period of notice necessary to terminate the agreement. Therides as to termination of contracts of employment seem to be these.Where the contract itself states the period of notice on which it maybe determined, that statement governs the question. Where thoughthe contract is silent on the period of notice on which it may be determined,still a custom is proved that a contract of such a character can be deter-mined on such and such a period of notice, then that custom governsthe question. Where the contract is silent on the period of notice onwhich it may be determined and where no custom as to such periodcan be proved but still it is shown to be a contract terminable on noticeof some sort, then the period of notice on which the contract is terminablemust be a reasonable one. But there remains a further category. Ifa contract of employment is expressed to be for a definite period andnothing as to terminability on notice can be discovered in it or readinto'it, then its termination by the employer without lawful cause beforethat definite period has elapsed is a case of wrongful dismissal, and aninstance of the general legal rule that action will lie for unjustifiablerepudiation of a contract whether of employment or of any other character.The remedy for such unjustifiable repudiation is damages.
1 think the present contract is one of this last character. It is expressedto be for a definite period whose duration is emphasized by the rise insalary to take place when two years of. the period have elapsed, and,the employer contemplates the employee coming from a distance toperform his duties under -the contract and so to forego changes of employ-ment elsewhere. If that is so, then all that is necessary is to estimatethe damages which plaintiff is entitled to claim for breach of contract.
He claims six months’ pay and as he had every reason to expect afour years’ employment and as he has been kept here by the refusalof the defendants to pay that amount, I think he is fairly entitled to thesum, viz., Rs. 4,800. It is in evidence that he has done all that he canto obtain other employment and .that this is a time when it is very difficultfor men of his profession, engineers, to get employment at all. Accordingto the .evidence, then, it is no fault of his if he has failed to reducedefendants’ liabilities by getting employment elsewhere. With thesix months’ pay will go the claim for a house allowance, Rs. 70 per mensem,
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MACDONELL C.J.—Forsyth t. Walker and Clark Spence.
again since he has been detained here through the defendants' refusal
to pay. His claim pn his car mileage allowance must be disallowed.Such an allowance is given an emploj'ee that he may do his duties assuch without being out of ‘pocket, not that he may make money outof it. His claim to a Eibby boat passage to England, which is agreedat Rs. 801. seems to be conceded and he is therefore entitled to thisalso. Total damages, Rs. 4,800 plus Rs. 420 plus Rs. 891, equalsRs. 6,112.
I would add this. In his plaint plaintiff claims damages but thengoes on to speak of them as due* to ** discontinuance of his services with-out reasonable notice * This is really to confuse two things, damagesfor illegal repudiation of a contract, and compensation for terminationof a contract terminable on reasonable notice without having beengiven that reasonable notice. If I am wrong in holding, as I do, thatthis was a contract illegally repudiated with liability to damages as theconsequence, and if it really is a case of a contract terminable on reason-able notice, still I would say that six months* notice and no less periodwould he a reasonable notice on such a contract as this in all the attendantcircumstances.
The appeal then must be allowed with costs, and the judgment belowmust be set aside and altered into a judgment for plaintiff for damagesRs. 6illl and costs.
Garvin S.P.J.—I agree.
Appeal allowed.