1 The respondents were employees of the appellants whose services were terminated. They sued for wrongful dismissal. The learned judicial commissioner Lai Siu Chiu held that the termination was wrongful. She awarded the respondent (Sim) in Civil Appeal No 21 of 1992 the sum of $24,050 as damages and the respondent (Ang) in Civil Appeal No 22 of 1992 the sum of $2,950. The appellants appealed against both these orders. At the conclusion of the hearing we allowed the appeal in CA 21/1992 and reduced the amount of damages awarded to Sim for wrongful dismissal to a sum of $4,180. Costs were given to the appellants and we fixed the amount at $5,000. However, we dismissed the appeal in CA 22/1992 with costs to the respondent (Ang) fixed at $3,000. We now give our reasons.

2 The facts of the case giving rise to the two actions were not very much in dispute. Sim was first employed by the appellants on 17 January 1985. A written agreement was entered into between them (`the service agreement`). Some three weeks later Ang was also employed by the appellants in similar terms though his position and wages were different from Sim. For the purposes of the present proceedings the following were the relevant provisions of the service agreements:

3 On 15 March 1987 both Sim and Ang were assigned for duties in the United Kingdom, Sim at Birmingham and Ang at Manchester. These assignments were in accordance with cl 3.01 of the service agreement. We should at this juncture mention that the appellants are a subsidiary of a multinational company, with affiliated or subsidiary companies worldwide.

4 At Ang`s workplace at Manchester he encountered remarks being made by other people as to whether he had proper immigration clearance to work there. It was said that he required a work permit. However, Sim did not experience similar encounters. But both were unhappy with regard to the amount of the allowances which the appellants were paying them for living in England. They complained on both these matters, namely, the question of the work permit and the amount of the allowance, to the appellants` operations manager, one David Reed (`Reed`) who apparently did not attend to those complaints to their satisfaction.

5 The learned judicial commissioner found the complaint of inadequate allowance to be false. As regards the question of the need for a work permit, she found that Sim did not encounter anything on that at all at his workplace and if not for the influence of Ang, he would not have raised it with Reed. Nothing in this case really turned on this point.

6 On 24 March 1987, both Sim and Ang, without prior approval, returned to Singapore. The next day they were summoned to go up to Kuala Lumpur to see Reed, who was also the man in charge of an affiliated company, Alexander Proudfoot (Malaysia) Sdn Bhd (`AP Malaysia`). On 26 March 1987 at the office of AP Malaysia, Reed told them separately that their services were terminated and he handed to each a written notice of termination of their employment. The written notice was typed on the letterhead of AP Malaysia and signed by Reed for AP Malaysia. The contents of the letter read:

7 On receipt of the letter Sim and Ang left the office of Reed. They did not report for work the following day. But they remained on stand-by. They received as usual, on fortnightly basis, their wages for the period of the notice, namely, 26 March to 25 April 1987. Nothing more was heard from the respondents until 10 June 1987 when the respondents` solicitors wrote to the appellants alleging that the notices of 26 March 1987 were defective. Ang managed to find new employment with effect from 1 June 1987. But Sim was less fortunate. He only found employment in October 1987 at a reduced salary of $3,000.

8 The learned judicial commissioner found that it was due to a clerical error that the notice of termination was typed on the letterhead of AP Malaysia. She rejected the contention of the appellants that the notice was nevertheless valid as it was signed and handed over by Reed to Sim and Ang personally. She held that the notice was invalid on the ground that AP Malaysia was a separate entity from the appellants. She also held that the notice did not seek to terminate the services of Sim and Ang immediately with the tendering of one month`s pay in lieu of notice. She awarded Sim the sum of $24,000 being the salary he would have received from the appellants for the period May to September 1987 (at $4,810 per month), when Sim was unemployed. She awarded Ang the sum of only $2,910, being one month`s wages for May 1987.

9 At the court below there was a counterclaim by the appellants against each of the respondents on the ground that the respondents were in breach of contract. However, as the appellants had not pleaded any particulars of damage or led any evidence of the damages caused by the respondents` alleged breaches, the counterclaims were rejected by the judicial commissioner. The counterclaims were not further pursued.

10 Before us, three main points were canvassed. First, that the notices issued to both Sim and Ang were valid or alternatively sufficient notice of termination had in any event been given. Second, the respondents had by conduct accepted the termination of employment. Third, the amount of damages awarded to the respondents was excessive.

11 On the first point we agreed with the learned judicial commissioner that the notice issued to each of the respondents was of no effect and did not bring about a termination of the respondents` employment with the appellants with effect from 25 April 1987. Clause 7.01 of the service agreement expressly provided that `the employment may be terminated` by the appellants giving one month`s written notice to each of the respondents. The notices purportedly issued to the respondents were not issued by the appellants but by a completely different entity, AP Malaysia, with whom the respondents had no contractual relationship whatsoever. The notices were defective not just on account of the use of a wrong letterhead but also because Reed did not issue the notice on behalf of the appellants but on behalf of AP Malaysia. The effect might have been different if Reed had issued the notices on behalf of the appellants, though the letterhead used was that of AP Malaysia. In our opinion, no valid written notice of termination was given by the appellants to bring to an end the contract of employment on 25 April 1987.

12 The second point raised by the appellants was this: that even if the notices were invalid the respondents had by their conduct accepted the termination of their employment. The appellants relied on the fact that the respondents did not turn up for work after 26 March 1987. In our opinion, this was reading far too much into their conduct which was brought about by the appellants` operations manager telling the respondents not to turn up for work for the next one month but to keep themselves contactable for assignments. What could the respondents do? Were they expected to barge into the appellants` office in Singapore when they had been told not to do so? The fault for the defective notice lay with the appellants. A party who wishes to exercise a right under a contract must do so in accordance with its terms. We do not think it lies in the mouth of a party to say that as the other party did not object he must be deemed to have accepted the notice. We agreed that the parties could by word or conduct vary the terms of a contract. But there must be clear proof that there was such an intention to vary the terms. There was really nothing in the conduct of the respondents which showed that they had unequivocally accepted the termination. On the contrary, there was evidence that they were not happy and consulted their solicitors for advice.

13 Turning to the third question, it was true that with effect from 26 April 1987 the appellants had nothing to do with the respondents. They had effectively repudiated the contracts of employment with the respondents and had the respondents excluded thereafter. In those circumstances what then would be the correct measure of damages for the wrongful dismissal? The normal measure is the amount the employee would have earned under the contract for the period until the employer could lawfully have terminated it, less the amount he could reasonably be expected to earn in other employment. If the contract expressly provides that it is terminable upon say a month`s notice, the damages will ordinarily be a month`s wages: see Hartley v Harman. [1840] 11 Ad & E 798[] 113 ER 617 These principles were recently re-stated in the case Gunton v Richmond-Upon-Thames London Borough Council [1980] ICR 755[1980] 3 All ER 577 where Buckley LJ said at p 772:

14 If a Master who is entitled to dismiss a servant on not less than three month`s notice, wrongfully purports to dismiss the servant summarily, the dismissal, being wrongful, is a nullity and the servant can recover as damages for breach of contract three month`s remuneration and no more, subject to mitigation; that is to say, remuneration for the three months following the summary dismissal. If the Master wrongfully purports to dismiss the servant on a month`s notice and continues to employ him and pay him during the month, no breach occurs until the servant is excluded from his employment until the end of the month, in which case he is entitled, subject to mitigation, to damages equivalent to three month`s remuneration from the date of exclusion. If the master were to pay the servant one month`s remuneration in lieu of notice and were to exclude him from his employment forthwith, there would be an immediate breach of contract by the master; the servant would be entitled to three month`s remuneration by way of damages, but would have to give credit for the one month`s remuneration paid in lieu of notice.`

15 Under cl 7.01 all that the appellants needed to bring about a lawful termination of each of the contracts of employment was to give a month`s notice or pay a month`s salary in lieu of notice. That was all the quantum of damages which each of the respondents was entitled to. As the last drawn monthly salary of Sim was $4,180 we accordingly reduced the amount of damages awarded to Sim to that amount. The appeal in CA 21/1992 was allowed to that extent. In our opinion, the learned judicial commissioner was in error to hold that until Sim accepted the repudiation by taking up other employment, he was entitled to all his salary for that period as damages. The refusal by an employee to accept a repudiation by the employer cannot enhance the quantum of damage the employer is liable to pay in accordance with the terms of the contract of employment.

16 As regards Ang, since he was only out of a job for about a month, the court below awarded him the sum of one month`s salary as damages. That was the correct measure of damages. Accordingly, we dismissed the appeal in CA No 22/1992.

17 Outcome: