Bertram B. Nwajagu V. British American Insurance Company (Nigeria) Limited (2000)

LawGlobal-Hub Lead Judgment Report

AKAAHS, J.C.A. 

The plaintiff was first employed by the defendant as a home service agent on a weekly subsidy of E12(pounds) (N24) by letter dated 1st January, 1973 tendered as Exhibit “A”. On 26th May, 1978 he was advanced to the position of Staff Manager and was given another letter of appointment which was received in evidence as Exhibits “B”. Paragraph 2 of Exhibit “B” reads:-
“From the commencement of this appointment, you will receive a basic salary of N58.00 weekly together with commissions based on the business generated by the staff allocated to you in the district.
The terms of such commissions are contained in the attached Agreement which also sets out the conditions of service and responsibilities applicable to this appointment”.
(Italics mine)
The Agreement referred to in Exhibit ‘B’ was put in evidence as Exhibit “DD”.
Clauses 7, 8, 19 and 20 of Exhibit “DD” provide: –
“7. The Staff Manager agrees that in the event of the termination of this Agreement by death, permanent disability, resignation, retirement or termination by the company, obligation to pay basic pay, bonuses, or perquisites other than the superannuation benefits, if qualified, shall cease with the weekly basic pay bonuses for the last week during which the Staff Manager shall actively manage the staff under this Agreement.
8. It is hereby agreed that if the Staff Manager resigns or is discharged from the company, and shortages are discovered, or amounts owed by way of staff loans such amount due the company can be deducted from the Staff Manager’s compensation, be it basic pay, bonuses or other monies held to the Staff Manager’s credit.
19. Either party shall have the right to terminate this Agreement on one month’s notice to the other. Either party may elect in lieu of one month’s notice to pay one month’s compensation to the other.
20. It is expressly understood that this Agreement supercedes and replaces any previous agreement, written or verbal, between the two parties hereto”.
(Italics mine for emphasis).
Exhibit “DD” which was signed by the Head of Marketing of the defendant company and the plaintiff and was witnessed is clear and unambiguous and, it not only provides for termination and the duration of notice of such termination but emphatically states that the Agreement supercedes and replaces any previous agreement written or verbal between the parties.

Following allegations of impropriety levied against the plaintiff, he was served with a letter of dismissal with ref: AM.1/543/Id-N/86 dated 13th June, 1986, admitted as Exhibit “F”. This was later commuted to termination of appointment on 10th February, 1987 (see Exhibit “AA”) and was paid his termination benefits of N4,844.18k. The plaintiff was not satisfied with the action taken by the defendant so he took out a writ of summons in the Ikeja Division of the Lagos State High Court and claimed the following: –
1. A declaration that the purported summary dismissal of the plaintiff by the defendant on the 13th of June, 1986, is unlawful, void and of no effect.
2. Re-Instatement or in the Alternative;
3. N285,000.00 (two hundred and eighty-five thousand naira) consisting of N72,000 being pension of the plaintiff four (sic for) the relevant period, and N26,000.00k being gratuity of the plaintiff for the relevant period and N 187,000.00 being plaintiff’s salary till retirement age i.e. 60 years, less the sum of N4,844.18k
4. N100,000 general damages for loss and damage suffered by the plaintiff as the result of the defendant’s wrongful dismissal of the plaintiff.

The alternative claim was amended in paragraph 77 of the further amended statement of claim to N414,955.82k being special and general damages. After the defendants had filed their amended statement of defence the case went to trial. The plaintiff testified and tendered several exhibits. The defendants called two witnesses after which learned counsel addressed the court. In a reserved judgment which was delivered on 26th February, 1992, the learned trial Judge (Ola Martins J.) dismissed the plaintiff’s claim except for 3 months salary which he ordered should be paid to the plaintiff and to be computed up to 13/6/86.

The plaintiff was dissatisfied with the judgment of the trial court and accordingly filed his notice and three grounds of appeal. With leave of court, he later amended the grounds of appeal by filing six grounds of appeal on 21/5/99 from which he raised three issues for determination as follows: –
“1. Was the employment of the appellant properly terminated by the respondent on the basis of commutation of the initial dismissal to termination and on the terms and conditions of the employment of the plaintiff/apellant?.
2. Was the learned trial Judge right on his conclusions on the issue of malice proved by the appellant and the issue of the “death claim investigation (Exhibits “N” and “O”) and the appellant’s response thereto (Exhibit ‘P’)?
3. What is the true effect of the Collective Agreement which the parties agreed governed the employment of the appellant?. And what rights and remedies accrue to the appellant on termination of his employment in breach of the collective agreement?”.

The respondent also identified three issues for determination in brief and they are:-
“1. Whether the termination of plaintiff can be justified having regard to the fact that it was a commutation of the dismissal which (according to the plaintiff) cannot be justified and was also not in accordance with the terms and conditions of service of the plaintiff?.
2. Whether the learned trial Judge was right in holding that the plaintiff did not prove malice against the defendant?.
3. Whether the plaintiff is entitled to reinstatement by virtue of the collective agreement governing his employment?”.

I consider the issues identified by the appellant as well as the respondent to be the same and they will be so treated accordingly.

Issue No. 1
Learned counsel for the appellant referred to Exhibit ‘AA’ which changed the dismissal of the plaintiff/appellant to termination and states that, Exhibit ‘F’ the letter of dismissal is explicit of the fact that the dismissal for contravening article 5(d)(i) part 11 (section 1) of the Collective Agreement and argued that Exhibit ‘AA’ only reduced the punishment and is not nullification or Withdrawal of Exhibit ‘F’. Learned counsel submitted that the part of the Collective Agreement which the respondent invoked to dismiss the appellant can only be used for proven cases of theft, fraud, dishonestly, defalcations and irregular practices in respect of cash, vouchers, records returns on customers’ account and foreign exchange transactions but the respondent failed to prove the allegations. As there was no proof of fraud or dishonestly or such like or any misconduct of any kind as required under article 5(d)(i) part 11 (section 1) of the Collective Agreement and the procedure leading to termination, the learned trial Judge was in error when he held that the termination was in conformity with the procedure in the Collective Agreement. He therefore submitted that the purported termination is unjustified unlawful null and void.

Learned counsel for the respondent referred to the finding made by the learned trial Judge that, the admission of the plaintiff that he colluded with another employee to change a report on payment of claim to the detriment of the company was sufficient to warrant dismissal from which there is no appeal and contended that, it is strange for the plaintiff/appellant to argue that there was no proof of fraud or dishonesty against the appellant. He submitted that rights which were compromised or waived before a suit was filed cannot constitute a cause of action and by accepting a letter of termination and terminal benefits in substitution of prior dismissal, the appellant is deemed to have waived his right to challenge his dismissal; moreso the acceptance of termination was before the action was filed. The following cases were cited in support:-
Bakare v. LSCSC (1992) 8 NWLR (pt 262) 641, Ayanlere v. FMB (Nig.) Ltd (1998) 11 NWLR (Pt 575) 621; and A.C.B Plc v. Nbisike (1995) 8 NWLR (pt.416) 725.
He urged this court to reject the argument that the letters of dismissal and termination can be regarded as forming a continuous cause of action because it has no support legally or morally.

It is true that the respondent stated in Exhibit “F” that the appellant contravened Article 5d (i) Part II (Section 1) of the Collective Agreement and this formed the basis for his summary dismissal for gross misconduct. The said Collective Agreement was put in evidence as Exhibit “E” and was signed between the company representatives and Union representatives. The dismissal was no doubt an extreme disciplinary measure taken by the respondent against the appellant considering his past services to the company. Reason seemed to have prevailed when the dismissal was changed to termination thereby entitling the appellant to his terminal benefits. If the respondent had insisted on the dismissal, all that the appellant would be entitled to if the reason for the dismissal were not proved damages for wrongful dismissal but certainly not reinstatement because his contact of employment is a pure case of master and servant and it is a well established principle of law that a master is at common law entitled to dismiss his servant from his employment for good or bad reasons or for no reason at all: Oki v. Taylor Wall Tanjon (Nig.) Ltd (1965) 2 All NLR 45.

In A.C.B Plc v. Nbisike (1995) 8 NWLR (Pt.416) 725, Edozie J.C.A. expressed the view (with which I respectively agree) that the legal status of collective agreement is doubtful and has been described as “at best, a gentleman’s agreement, as extra-legal document totally devoid of sanctions… a product of trade Unionist’s pressure (per Ndoma-Egba J.C.A. in Nigeria-Arab Bank Ltd v. J. E. Shuaibu (1991) 4 NWLR (Pt. 186) 450 at 469. In the Law of Contract by Chitty Vol. II, 23rd Editions Articles 656-657 pages 337-338, the learned authors observed thus: –
“In modern conditions many employees are covered by collective agreements made between one or more trade unions on the side and one or more employers association on the other…
Much of the procedure of this collective bargaining is governed by practice, not strict law and there is not legal compulsion on either the employees or the employers to enter into collective bargaining except in the case of certain public boards or corporations.
There is no reported case on the legal status of such a collective agreement and the majority opinion of those concerned with such agreements is that they are not intended to create legal relations. This means that they are binding in honour only. And that their enforcement must depend on industrial and political pressure”.

In Chukwumah v. Shell Petroleum Development Co. Ltd. (1993) 4 NWLR (Pt.289) 512 it was held that an extraneous agreement not entered into by the parties to a contract of service cannot be made the basis of an action by an employee unless it is incorporated into the contract of service of such employee. See also Olaniyan v. University of Lagos (1995) 2 NWLR (Pt. 9) 599 at P.665.

In this case, the collective agreement Exhibit “F” which was signed between the representatives of Nigeria Employers’ Association of Banks, Insurance and Allied Institutions and the Association of Senior Staff of Banks, Insurance and Financial Institutions was not binding on the respondent with regard to its contract with the appellant as it was not incorporated into exhibits B and DD and it therefore gives the appellant no cause of action against the respondent.

I reject the contention by learned counsel for the appellant that the purported commutation of the dismissal to determination is null and void. Since the appellant’s dismissal was changed to termination, the cause of action and the legal consequences that must be considered must relate to the termination and no more.