Wee Kim San Lawrence Bernard v Robinson & Co (Singapore) Pte Ltd [2014] SGCA 43

In Wee Kim San Lawrence Bernard v Robinson & Co (Singapore) Pte Ltd, the Singapore Court of Appeal dismissed an appeal against an order to strike out the appellant’s claim for damages for constructive dismissal and, alternatively, breach of the implied term of mutual trust and confidence in an employment contract. The court considered at length the extent of damages which may be claimed in such circumstances and found that the appellant had already been paid more than what was contractually required and had made out no further claim against the respondent which would require additional payment. Accordingly, the appeal was dismissed.

Facts

Mr Wee (the “appellant”) had been employed with Robinson & Co (the “respondent”) for almost six years until his resignation in August 2012. The appellant’s employment contract provided for payment of two months’ salary in lieu of notice upon termination of the employment contract. However, the respondent paid the appellant four months’ salary in lieu of notice and another additional sum for unconsumed annual leave.

In December 2012, the appellant commenced proceedings against the respondent (the “Suit”) seeking damages for constructive dismissal, claiming that he had been forced to resign as a result of persecution and unreasonable bias by the respondent or its officers. In the alternative, the appellant claimed that the respondent had breached the implied term of mutual trust and confidence in his employment contract. The respondent applied to strike out the Suit on the ground that the Suit was frivolous, vexatious and an abuse of process and was successful before an Assistant Registrar. The appellant appealed this decision and the appeal was dismissed by the High Court.

The appellant appealed to the Court of Appeal.

Parties’ arguments

The respondent argued that the appellant’s claim was legally unsustainable because even if the appellant had been constructively dismissed, which it denied, he would not have been entitled to anything more than two months’ salary as stated in his employment contract. As it was, the appellant had already received more than this amount. It was also contended that the appellant’s claim was an abuse of process as it had been commenced for the collateral purpose of exerting pressure on the respondent to pay him additional sums to which he was not entitled.

The appellant contended 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 (the “implied term”) in his employment contract and such damages should be assessed in accordance with normal contractual principles. In addition, he argued he was similarly entitled to seek declaratory relief as to whether there had been a breach of the implied term that entitled him to resign.

Decision of the court

Constructive dismissal

The court explained that constructive dismissal refers to the situation where the employer’s repudiatory breach entitles the employee to treat himself as discharged from the employment contract. Although it is the employee himself who terminates the contract, it is as though the employer had effectively terminated the contract by manifesting an intention no longer to be bound by the contract, which position is then accepted by the employee. The meaning of the implied term is that the employer shall not, without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of mutual trust and confidence between employer and employee. A breach of the implied term by the employer would constitute a breach of a fundamental term of the employment contract and an employee who accepts this breach as a repudiation of the contract would be treated as having been constructively dismissed and be entitled to premature termination losses.

The normal measure of damages in cases of wrongful dismissal (which includes constructive dismissal) is 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.

Nature of appellant’s claim

The court identified the main plank of the appellant’s case as being that he was entitled to damages beyond the amount of salary payable for his contractual notice period because of the alleged breach of the implied term and because his employment with the respondent would have continued. The court found this argument to be legally unsustainable.

The court did not accept the appellant’s argument that breaches of different types of terms which result in identical consequences can nonetheless give rise to different measures of damages. Damages are compensatory in nature, and where the consequences of breaches of different types of terms are the same, there is no obvious reason to recompense the plaintiff differently based on the particular type of term that has been breached. The appellant’s claim was only for damages for financial loss arising from the premature termination of his employment with the respondent and was not for post-termination losses such as the loss of future employment prospects. The court therefore found that the appellant’s claim was simply one for constructive dismissal, for which compensation for the loss suffered would in this case be confined to two months’ salary in lieu of notice as stipulated in the appellant’s employment contract.

It is a well-established principle that there cannot be specific performance of an employment contract under common law and to accept the appellant’s proposition that damages for constructive dismissal in the present circumstances should be assessed on the basis that the employment relationship would have continued indefinitely, would be incompatible with this principle.

The appellant also contended that he was entitled to a declaration that the respondent had breached the implied term. This contention was raised for the first time in this appeal and the court noted that this would be a considerable obstacle for the appellant. However, even assuming the appellant would be allowed to seek declaratory relied and this matter was tried, the court was not convinced there was a “real controversy” between the parties, as required to establish standing to seek declaratory relief. Such a declaration as the appellant sought would have no consequence at all since, given the holding relating to the damages issue, the appellant had no legally sustainable basis to claim anything more than what he had already received and there was therefore no “real controversy”.

It was also evident that the parties had agreed on payment in lieu of notice as a means of settling the dispute between them. Having entered into such an agreement and having accepted the payment made by the respondent as a consequence, it was impermissible for the appellant to then seek to pursue a theoretical claim for a declaration.

Judgment

For the reasons set out above, the court dismissed the appeal.