Kouback v The Republic of Vanuatu

JUDGMENT OF THE COURT

Introduction

1.    This is an appeal against a decision of the Supreme Court of 9 March 2026 denying the bulk of a claim for various employment allowances by the Appellant, Noah Patrick Kouback, against his former employer, the Ministry of Foreign Affairs of the Republic of Vanuatu, (the Ministry).  

2.    The point at issue in the appeal is a simple one.  Mr. Kouback in his statement of claim pleaded that he was in continuous employment with the Ministry of Foreign Affairs of the Republic from 26 October 2011 to 10 May 2021.  As a consequence of him being in continuous employment he was entitled to various sums of money, in particular under s 54(1)(d) of the Employment Act.  The Respondent denies that Mr Kouback was in continuous employment and that he is entitled to any of the benefits at issue.

The Supreme Court Decision

3.    The primary Judge considered in detail evidence as to the periods when Mr Kouback was employed.  She concluded that he was not in continuous employment for the relevant period of 8.67 years. The effect of her judgment was that the interruptions of continuous employment were fatal to his claim. 

4.    The Judge had found that Mr. Kouback had not been in continuous employment with the State for six consecutive years and that he was therefore not entitled to a severance allowance. The Judge relied on s 9 of the Employment Act which provides as follows;

9. Form of contract
A contract of employment may be made in any form, whether written or oral:
Provided that a contract of employment for a fixed term exceeding 6 months or making it necessary for the employee to reside away from his ordinary place of residence shall be in writing and shall state the names of the parties, the nature of employment, the amount and the mode of payment of remuneration, and, where appropriate, any other terms and conditions of employment including housing, rations, transport and repatriation.

5.    Paragraph 54(1)(d) of the Employment Act provides as follows as to severance; 

54.    (1) Subject to section 55, where an employee has been in the continuous employment of an employer for a period of not less than 12 months commencing before, on or after the date of commencement of this Act, and –
(d) where the employee has been in continuous employment with the same employer for a continuous period of not less than 6 consecutive years and the employee resigns in good faith; or.....
the employer shall pay severance allowance to the employee under section 56 of this Act.

6.    We record that the time period in s 54(1)(d) has since been amended by Parliament, but it is common ground that the amendment does not apply to the period of Mr. Kouback’s employment. 

7.    The Judge found that Mr Kouback was continuously employed by the State for the following periods: 

(i)    Mr Kouback’s first period of continuous employment with the State was from 26 October 2011 to 1 May 2015 (3 years 6 months); 
(ii)    The second period of continuous employment with the State was from 24-25 June 2015 (2 days); 
(iii)    The third period of continuous employment with the State was from 3-18 November 2015 (16 days); 
(iv)    The fourth period of continuous employment with the State was from 22 April 2016 to 21 April 2018 (2 years); and 
(v)    The final and fifth period of continuous employment with the State was from 11 May 2018 to 10 February 2020 (1 year 9 months).

8.    It was held that Mr Kouback was not entitled to a severance allowance under s 54(1)(d) of the Employment Act because he was not in continuous employment for two periods.  Although it is not altogether clear from the judgment it is common ground that these were the periods of 2 May 2015 – 21 April 2016 and from 22 April 2018 – 10 May 2018.  These were interruptions to his continuous employment, and he was not entitled to severance based on continuous employment.  For the same reason his claim to housing and transport allowances for the period of 2 May 2015 and 21 April 2016 failed, as that was a period where it had been held, he was not employed.

9.    He was not entitled to severance as Head of Mission under s 30 of the Foreign Service Act as he was never the Head of Mission as defined in that Act.  

10.    It was held that Mr Kouback was entitled to VNPF employer contributions for the period from 23 July 2012 to 1 January 2015.  Judgment was entered on that aspect of the claim for VT592,515, but not the other claims.  

11.    Mr Kouback appeals the judgment refusing his severance claim saying he was in continuous employment from 2011 for 8.67 years.  He also appeals that part of the judgment refusing to award him housing and transport allowances, for part of that period for the same reason.

Discussion

Evidence of employment

12.    The evidence of employment for the first period where the Judge found that Mr Kouback was employed, was not an employment contract, but rather to a Note Verbalé which was a note to the Embassy of Belgium informing it that Mr Kouback had been appointed as Attaché to the Vanuatu Embassy in Brussels. This was the sole documentation evidencing his employment 26 October 2011 and the first Employment Agreement dated 23 July 2012.  We think that the Judge was right to regard the Note Verbalé as evidence of employment, but we note that it was not an employment contract as such.

13.    The same approach was not taken by the Judge in relation to Letters of Credence that were given during the period of 2 May 2015 – 21 April 2016 when she found that Mr Kouback was not employed.  However, these Letters of Credence like the Note Verbalé certified Mr Kouback’s appointment to a position, this time first as Counsellor to the Embassy of the Republic to the European Union and then as Counselor to the Embassy in Brussels.

14.    We make the point that there was an anomaly in the way the case was presented for the Respondent. It insisted that there was no continuous contract for the period in question and yet it accepted that the Note Verbalé evidenced employment.  However, as stated above this document was not an employment contract and said nothing about employment. Together with the Letters of Credence these were notices of the appointment to a diplomatic position for Mr. Kouback and nothing more. While they were not contracts, they were however evidence that Mr Kouback was in continuous employment with the Foreign Service, taking up appointments when they became available.

15.    There were a number of other clear indicia of the employment of Mr Kouback right through the two periods when it was found that he was not employed.  We list these:

•    In the 2015 Annual Report of the Vanuatu Mission presented to the Ministry of Foreign Affairs on 30 January 2016 Mr Kouback was shown in a diagram of the Embassy’s structure as being under the Ministry and the Ambassador and above the First and Second Secretary.  He is right in the middle of what appears to be a statement of the positions in the Embassy held by rank.  The diagram is consistent with him being employed during 2015.

•    From the time of initial employment in 2011, to his secondment to Geneva in 2019, Mr Kouback lived in an apartment in Brussels paid for by the Foreign Service. In other words, right through the period when he was alleged to be not employed by the Foreign service for the periods of 2 May 2015 – 21 April 2016 and from 22 April 2018 – 10 May 2018, he was in accommodation provided and paid for by the Ministry.  This is consistent with him being employed.  He was enjoying accommodation provided by it and was plainly doing so with their permission and support.

•    Correspondence produced for the periods when it was said that Mr. Kouback was not employed show him to be in correspondence with other personnel in the diplomatic service and doing work. In letters he signs himself off as “Minister Counsellor” and then sets out the address of the Embassy of the Republic of Vanuatu to the European Union.  The correspondence includes emails addressed to him from other employees of the Foreign Service, which have the flavour of emails between employees.

•    He was paid for services rendered during the periods when it is said he was not employed. Indeed, in his sworn statement Mr Y Basil the Director of the Department of Foreign Affairs states that for the period from 1 January 2015 – 21 April 2016, total of 15.75 months, the Foreign Service paid Mr. Kouback “his employment entitlements”. A great deal of pay slips and other payment documents were produced.  Although payments were spasmodic, payments received by Mr Kouback appear to average approximately VT10,500.00 a day and to have covered the period of alleged unemployment.

16.    Thus, the evidence shows that Mr Kouback was treated like an employee, and had duties which he was carrying out for the State and being paid for, and receiving benefits consistent with employment, for the periods he was said to be unemployed.

17.    It is to be expected that Mr Kouback would have been kept on as an employee in Europe during the periods when he did not have formal postings, as only thus could a person experienced in the Foreign Service be available for European postings when they arose. Had he not been working for the Foreign Service he would have been free to get other employment and would then not have been available if called upon. It is clear that Mr Kouback was promoted and received different postings to different places to carry out different duties while remaining in continuous employment. 

18.    Thus it can be said that Mr  Kouback enjoyed all the normal duties and benefits of an employee during the two periods when it is alleged he was not employed. In our assessment of the evidence, he was employed in those periods. Is there then a bar to him recovering the benefit in terms of s 54(1)(d) of the Employment Act? 

No formal documentation/oral or implied contract

19.    In finding that there was a bar, the primary Judge placed weight on s 9 of the Employment Act set out above, providing that contracts of employment for a fixed term of 6 months or requiring an employee to reside away from his ordinary place of residence, must be in writing. 

20.    However, the use of mandatory language requiring an agreement to be in writing does not determine the consequences of non-compliance. Indeed, no consequences are mentioned in the section.  Such clauses were considered by the New Zealand Court of Appeal in Warwick Henderson Gallery Limited v Western. ^[1] It was stated there that an oral employment agreement entered into and performed without compliance with the requirement for writing remains valid and enforceable. 

21.    It would be contrary to common sense and the objects of Employment Acts to allow an employer to plead lack of writing as a defence to enforcement of a proven oral agreement. It was noted in the Warick Henderson decision that there were many thousands of oral employment agreements in New Zealand. We have no doubt that there would be many such oral employment agreements in Vanuatu. We see s 9 as a statement requiring good practice from employers who will generally be in charge of documenting an employment contract.  But their failure to document in writing cannot be used by employer as a weapon disentitling an employee to the recovery of benefits that are plainly owed.  To do so would be to enable them to take advantage of their own wrong.  Therefore, we do not see the absence of a written contract for the periods in question as being in any way fatal to the claim.

22.    Can an employment contract be implied? As stated, it must be the case that the parties may still be in an employment relationship on the basis of an oral agreement, notwithstanding the statutory requirement for a written agreement.  Indeed, it was an oral agreement that must have existed for Mr Kouback to have taken up his initial posting under the Note Verbalé which as we have stated was not a contract.

23.    There are many instances where contracts are implied, or rather found to have been created despite the absence of an explicit agreement.  A good example can be seen from the English decision of Edmonds v Lawson ^[2] where it was held that applying an objective test there was a contract where a pupil barrister accepted an offer of pupilage with a set of chambers.  We consider it appropriate in considering whether an employment contract exists for a Court to assess the real nature of the relationship between the parties, taking into account all relevant matters that indicate their intention. 

24.    In Bryson v Three Foot Six Ltd ^[3] the New Zealand Supreme Court held that in determining the real nature of the relationship, “all relevant matters” include the written and oral terms of any contract between the parties, and “the way in which [the relationship] actually operated in practice”^[4].  In the Employment jurisdiction it was held in Varney v Tasman Regional Sports Trust ^[5]  where a genuine fixed-term agreement came to an end in April 2002 but was allowed to carry on, the employment relationship continued on the same terms, but was indeterminate in duration. ^[6]  This decision was followed in Electrotech Controls Ltd v Rarere ^[7].

25.    The fact that the parties have continued to conduct themselves on the same basis after there has been an employment relationship suggests that the employment relationship has continued.

26.    It was argued and indeed decided by the primary Judge that there was no proper pleading in the statement of claim of an implied contract.  However, the pleading does not seek to label the nature of the contract.  It simply asserts at the outset that “The Claimant and the Defendant were parties to various contracts of employment executed for engaging the Claimant under various diplomatic posts in the Defendant’s embassies in Belgium and Switzerland”.  That is consistent with the evidence of multiple different arrangements.  It goes on to plead that “At all material times over the continuous period totalling 8.67 years, the Claimant was engaged on contracts of employment with the Defendant”.  Particulars of the relevant “contracts of employment” are then given.

27.    These pleadings accurately reflect what happened.  It would be simplistic to label the contract as an implied contract.  The employment contract was, as we have set out, evidenced by multiple express contract documents.  They are all evidence of an overall arrangement to employ               Mr Kouback as a diplomat right through the 8.67 years period.  There was no need to label the contract further. 

28.    In our view the correct analysis is that Mr Kouback was employed initially for no fixed term in 2011 in an oral arrangement, to work in the diplomatic service in Europe, and this was documented by various documents and postings as he took up his position, was promoted, and postings changed.  The pleading is sufficiently general to cover this.  We note that it was open to the Respondent to seek further particulars if it wanted greater precision as to the type of contract, but no particulars were sought.

29.    Therefore, we differ from the primary Judge and find that Mr Kouback was continuously employed for 6 consecutive years, and the pleading was sufficient.  We now turn to the relief sought.

Relief sought

30.    The relief sought was first a severance allowance of VT7,192,108 for the 8.67 years of employment.  We find that Mr Kouback was in employment by the Respondent for that time, and the requirement of 6 continuous years of employment was met.  We therefore consider that this sum is owed to Mr Kouback.  The actual quantum amount was not contested before us.

31.    We agree with the primary Judge that Mr Kouback was never a Head of Mission under s 30 of the Foreign Services Act.  All the written material indicates that he never reached a post that high.

32.    Mr Kouback is also entitled to a transport allowance for the period of 2 May 2015 to 21 April 2016.  The evidence of the amount has only been expressed to us in Euros, and we will order that Euro 4,668 be paid to him.

The application for extension of time to cross-appeal

33.    There was an application for an extension of time to file a cross-appeal against the Judge’s decision as to costs, and it was proposed that the Appellant pay the Respondent’s costs of the cross-appeal, and that costs should have been ordered to lie where they fell in the Supreme Court.  The order in the Supreme Court had been for standard costs to be paid to the Appellant.

34.    The reasons for the delay in filing the notice of appeal within time come down to administrative failures on the part of the Republic.  Those reasons are no excuse for the late filing.

35.    More importantly the appeal has no merit.  In this judgment Mr Kouback has been successful in his appeal, reflecting the fact that he should have succeeded on more issues in the Supreme Court.  On the basis of our findings in favour or Mr Kouback’s claims, the costs order that was made in his favour was modest and was well warranted.

36.    There being no acceptable excuse for the delay, and the issue that it is wished to raise on appeal being without merit, leave to appeal out of time is refused.

Result

37.    The appeal is allowed.

38.    It is ordered that the Respondent pay the Appellant severance pay of VT7,192,108, and a Transport Allowance payment of Euro 4,668.

39.    The application by the Respondent for an extension of time to file a cross-appeal is declined.

40.    We propose leaving the other orders made by the Judge as to the payment for VNPF contributions and interest in place.

DATED at Port Vila this 15th day of May 2026
BY THE COURT

Hon. Chief Justice Vincent Lunabek

[1] Warwick Henderson Gallery Limited v Western [2005] ERNZ 921 (CA).
[2] [2000] Q.B. 501
[3] [2005] NZSC 34
[4] (at [31]–[32])
[5] EMC Christchurch CC15/04, 23 July 2004 (EmpC)
[6] (at [20], [41]–[43])
[7] [2007] ERNZ 586 (EmpC) at [31] – [37].