Nigerian Produce Marketing Board v. A.O. Adewunmi (1972)

LawGlobal-Hub Lead Judgment Report

FATAYI-WILLIAMS, J.S.C.

In the Lagos High Court in Suit No. LD/346/68, the respondent as plaintiff claimed from the defendants the sum of 330,000 pounds as damages for wrongful dismissal from the defendants employment as their sales officer on the 4th May, 1968. He also claimed, in the alternative, a declaration that the said dismissal by the defendants is “illegal, null and void, and of no effect. ”

Paragraphs 26–28 of the statement of claim filed by the plaintiff read:-

“26. The plaintiff has never at any time acted in breach of the terms, expressed or implied, of his employment with the defendants.

27. The plaintiff will contend at the trial of this action that his dismissal was against the principles of natural justice.
28. The plaintiff will further contend at the trial of this action that the review undertaken by the Board of Directors of the defendants is in excess of its power, and that the members who attended the meeting of the Board of Directors on the day this case was ‘reviewed’ acted maliciously.

WHEREUPON the plaintiff claims as follows:-

(a) Loss of gratuity and/or non-contributory fund 10,000.00

(b) Loss of salary withheld by the defendants during the period of suspension, i.e. 1st November, 1967 to 20th Nvember, 1967 …. 56pounds.3s.4dGeneral Damages

(c) Damages not already covered under (a) and (b) above , .. 19,943pounds.6s.8d”

After reviewing the evidence adduced by both parties, the learned trial judge, in a reserved judgment, found inter alia, as follows:-

“On the evidence before me I find that the directors of the company when dealing with the plaintiff’s case did not observe the principles of natural justice and that they acted ultra vires. The dismissal was therefore wrongful and I award the sum of 4,500pounds as damages in respect of the non-contributory provident fund which would be due to the plaintiff. I consider this amount to be reasonable as the plaintiff is comparatively young and could still get another suitable employment. I refer to the decision of the Supreme Court in Electricity Corporation of Nigeria v. George Nicol, S.c. 591/1966 of 3/6/68 unreported. Also Manubens v. Leon [1919] 2 K.B. p. 208 and Salt v. Power Plant Co. Ltd. [1936] 2 All E.R. p. 322.

I award the sum of 56pounds.13s.4d. loss of salary, and 1,000punds as general damages in favour of the plaintiff, with 100 guineas costs.”

In the appeal now before us, Mr. Lardner who appeared for the defendants/appellants informed us, quite rightly we think, that he had no complaint against the finding of the learned trial judge that the defendants/appellants were liable for wrongful dismissal. His main complaint, and indeed the only complaint, was about the quantum of damages awarded. His main grounds of appeal in this respect, all of which he argued together, read:-

“1. On the question of award of damages the learned trial judge misdirected himself in law and on the evidence by failing to make certain essential and definite findings of fact, to wit,

(a) whether the contract of service of the plaintiff was determinable only on his attaining the age of 55;

(b) if not so, the circumstances thereof with regard to:-

(i) the notice required and whether it was an express term of the contract or implied and to be determined as a fact having regard to all the circumstances;

(ii) the contractural terminal entitlements of the plaintiff particularly his entitlement, if any, against the defendant under the staff provident fund.

2. The learned judge misdirected himself in law and on the evidence in awarding against the defendant damages in the sum of 4,500pounds under the noncontributory provident fund without stating the basis of his award when:

(a) there is nothing in exhibits A (the Trust Deed and Rules of the staff provident fund), B and C (Conditions of Service) which in law entitled him to make any award under this head;

(b) the plaintiff did not plead any facts whereby the court could take cognisance of anything in exhibit A in awarding the plaintiff damages under it;

(c) the plaintiff did not plead or establish that his contract with the defendant was for a definite and fixed term determinable only on his attaining the age of 55.

3. The award of 4,500pounds damages under the Staff Provident Fund is arbitrary and cannot be supported having regard to the award of six months salary as damages for wrongful dismissal in which case the plaintiff would only be entitled to 25 per cent of six months’ salary if a claim for damages under the Staff Provident Fund were established.
4. The verdict in so far as the award of damages is concerned is against the weight of evidence.”

The argument of Mr Lardner in support of these grounds of appeal may be summarised as follows. The learned trial judge did not consider the law dealing with the measure of damages in cases of breach of contract. If he had done so he would have tried to ascertain from the Conditions of Service (exhibit B) whether the plaintiff/respondent’s contract was determinable only at the age of 55 as he had assumed or at an earlier date. There was machinery in the Conditions of Service (exhibit C) by which either party could bring the contract of employment to an end; where one party fails to follow the machinery, the measure of damages would be such amount as would put the injured party in the same position as if such machinery had been followed. In other words, the measure of damages is the amount of money due to the plaintiff/respondent in lieu of notice, which in this case, is 1,020pounds.0s.0d, that is, six months’ pay. He is also entitled to his salary for November which is 56pounds.13s.4d. As for the award of 4,500pounds made to the Plaintiff/Respondent under the Staff Non-contributory Provident Fund, this could only be based on the provisions of the Staff Provident Fund Rules (exhibit A). All that the plaintiff/respondent could get under this head are set out in the formula at page 14 of the Rules. According to that formula, he is only entitled to the sum of 692pounds.11s.5d. On this calculation, the plaintiff/respondent, learned counsel finally contended, was only entitled to the sum of 1,769pounds.7s.9d and not to the total sum of 5,556pounds.13s.4d awarded him by the learned trial judge.

In reply, Mr. Adesanya for the plaintiff/respondent, pointed out that the plaintiff/respondent adduced evidence in respect of the damages claimed by him, that both his evidence and that of the plaintiff’s 4th witness on the point were never challenged by the defendants/appellants who called no evidence on the point at all. The defendants/appellants, it was further contended, merely addressed the court, not on the law as to the measure of damages, but only on the justification of the dismissal.

For that reason, learned counsel finally submitted, this court should not interfere with the amount awarded by the learned trial judge.

In a claim for wrongful dismissal, the measure of damages is prima facie the amount that the plaintiff would have earned had the employment continued according to contract. (See Beckham v. Drake (1849) 2 H.L. Cas. 579 at pp. 607-608). Where, however, the defendant, on giving the prescribed notice, has a right to terminate the contract before the end of the term, the damages awarded, apart from other, entitlements, should be limited to the amount which would have been earned by the plaintiff over the period of notice, bearing in mind that it is the duty of the plaintiff to minimise the damage which he sustains by the wrongful dismissal.

In the case in hand, there is provision in the Conditions of Service (exhibit B) which is agreed by both parties as governing the terms of the plaintiff/respondent’s employment, whereby either party could bring the contract to an end. In this connection, we refer to paragraph 1402 of exhibit B which reads:-

“1402. Pensionable appointments are normally subject to determination at six months’ notice on either side, provided that:-

(a) The Company may at any time determine the engagement of an officer:-

(i) forthwith, on payment of six months’ salary in lieu of notice, or

(ii) at less than six months’ notice on payment at the time the notice has effect of salary in lieu of notice for the period by which the notice falls short of six months.

(b) An Officer may apply to the Chairman to be permitted to resign at less than six months’ notice, whereupon the Chairman may agree to the waiver of all or any part of the notice. If the Chairman does not agree to such waiver, the date of the application may, if the Officer so requests, be deemed to be that from which the notice runs.

An Officer leaving the service in accordance with the procedure set out in this paragraph will be entitled to those benefits for which he may be eligible within the Rules of the Superannuation Fund.”

Where, as in this case, the defendants/appellants have failed to follow the machinery laid down in the above provisions of paragraph 1402, the measure of damages, as Mr. Lardner has rightly pointed out, is enough money to put the plaintiff/respondent in the same position as if such machinery has been followed. In other words, the plaintiff/respondent is only entitled to what he would have received had he been given the six months notice provided for in paragraph 1402 of the Conditions of Service applicable to the plaintiff/respondent. Since his salary at the time of his dismissal on 4th May, 1958 was 2,040pounds.0s.0d per annum, he would be entitled to only 1,020pounds.0s.0d in this respect. The learned trial judge was therefore in error in awarding 1,000pounds as general damages. In this connection, we refer to the case of Swiss Nigerian Wood Industries Ltd. v. Danilo Raga, S.C. 14/70 delivered on 3rd March, 1970 where we observed as follows:

“the terms ‘general’ and ‘special’ damages are normally inapt in the categorisation of damages for the purposes of awards in cases of breach of contract. We have had occasion to point this out before (see Agbaje v. National Motors Ltd. S.c. 20/68 dated 13th March, 1970) and we make the point that apart from damages naturally resulting from the breach no other form of general damages can be contemplated. ”

This observation was referred to with approval in Paterson Zochonis & Co. Ltd. v. A.J. Ogedengbe S.c. 636/66 delivered on 17th March, 1972.

In addition to the award of six months’ pay in lieu of notice, we are of the view that the plaintiff/respondent is also entitled under the same paragraph 1402:-

“to those benefits for which he may be eligible within the Rules of the Superannuation Fund.”

The learned trial judge awarded him the sum of 4,500pounds.0s.0d under this head without showing how he arrived at this sum. He merely stated that he considered “this amount to be reasonable.” In order to arrive at the correct sum to which the plaintiff/respondent is entitled under this head, reference must be made to Rules 11 and 12 of the Staff Provident Fund Rules (exhibit A) which read:-

“11. If a member leaves the Service of the Employer in circumstances other than those set out in Rule 12 the Trustees shall pay to him the whole or a proportion of the sums standing to his credit in his account according to the length of service with the employers calculated on the following scales:

Years of Qualifying Amount payable to Member

Less than 3 years…………………………. Nil

3 years and over…………………………. 20%

5 years and over…………………………. 40%

7 years and over …………………………60%

10 years and over……………………….. 100%

…

12. If the service of a member is terminated on account of any grave fault, misconduct, dishonesty or breach of contract justifying dismissal the balance of his account shall fall into the Fund and shall be dealt with in the same way as interest earned on investments and not credited to Members’ Accounts in accordance with rule 7(ii) provided that the Trustees on the recommendation of the member’s employer may in their absolute discretion pay to such member a gratuity of such amount as they think fit but not in any circumstances and notwithstanding proviso (a) to rule 11 exceeding the payment from the Account to which he would have been entitled if his membership had terminated under the terms of rule 11.”

Having accepted the verdict of the court below that the dismissal of the plaintiff/respondent was wrongful, Mr. Lardner further conceded at the hearing of the appeal in this court that the provisions of rule 12 would not apply to the plaintiff/respondent’s case. He submitted, however, that since his employment with the defendants/appellants could have been lawfully terminated by giving him six months’ notice, the entitlement of the plaintiff/respondent under the Fund should be no more than the amount payable to him in the proportion of the amount standing to his credit according to his length of service with the defendants/appellants calculated according to the scales shown in rule 11. We think there is merit in Mr. Lardner’s submission. The provisions of rule 11 are quite clear on the point and leave no room for ambiguity.

The Chief Accountant of the defendants/appellants testified as the 4th witness for the plaintiff/respondent. His testimony with respect to the Board’s Provident Fund Scheme which confirms the scale in rule 11 reads:-

“We have a staff provident fund. It is non-contributory. The company pays 25 per cent of a salary per month into the account. When a staff retires we find out what 25 per cent of the total emolument is. If he has spent 10 years, or over he gets the whole amount. If less than 10 years, but over 7 years, he takes 60 per cent, 5 years and over 40 per cent.

The entitlement up to the time the plaintiff left the company would be 692 pounds 11s.5d. Up to December 1983 he will be entitled to 9,495pounds 9s.8d. ”

When he testified in May 1969, the plaintiff/respondent stated that he was 40 years of age. He would therefore be about 55 years in 1983. Therefore, when the plaintiff’s 4th witness gave his entitlement as 9,495pounds 9s.8d in 1983, he was merely stating what the plaintiff/respondent would have been entitled to had he worked for the Board until he reached the age of 55 years.

As we had pointed out earlier, all the plaintiff/respondent was entitled to by way of damages in respect of his pay was the six months’ salary which he would have received had the defendants/appellants complied with the provisions of paragraph 1402 of the Conditions of Service (exhibit B). He is, therefore, not entitled under the Staff Provident Fund either to the sum of 9,495pounds 9s.8d or to the sum of 4,500pounds awarded him by the learned trial judge. In our view, all he is entitled to is the amount stated by the plaintiff’s 4th witness in his testimony on his behalf, that is, 692pounds 11s.5d. The learned trial judge was therefore clearly in error in awarding him the sum of 4,500pounds under this head.

In the course of his argument before us, Mr. Lardner conceded that the plaintiff/respondent is entitled to the sum of 56pounds,13s.4d awarded him as part of his salary withheld by the defendants/appellants during the period 1st to 20th November, 1967, when the plaintiff/respondent was suspended from duty. This amount brings the total amount of damages which the plaintiff/respondent should have been awarded to 1,769pounds 4s.9d made up as follows:

Pounds s d

(a) Salary for the period 1st-20th November, 1967 56 13 4

(b) Six months’ pay in lieu of notice 1,020 0 0

(c) Staff Provident Fund entitlement 692 11 5

TOTAL 1,769pounds 4s. 9d

There is one other point on which we think we should make our views known. In his reply, Mr. Adesanya pointed out that the only evidence regarding the damages claimed was given by the plaintiff/respondent and his witness. He therefore submitted that since the defendants/appellants gave no evidence in respect of the damages claimed and chose not to address the court on the quantum of damages, it was not open to them to dispute the amount awarded by the court below before us. This submission, to our mind, is fallacious in that learned counsel for the plaintiff/respondent is of the view, which we think is erroneous, that where the amount of damages is not disputed, it is, by implication, admitted. We must refer, in this connection, to the provisions of Order 18, rule 13 (4) of the Rules of the Supreme Court (the English Rules) which still apply in the High Court of Lagos State and which read:-

“Any allegation that a party has suffered damage and any allegation as to the amount of damages is deemed to be traversed unless specifically admitted.”

This rule was taken from the former Order 21, rule 4 and applies to damage of all kinds, and whether the alleged damage is part of the cause of action or not (See Wilby v. Elston 8 c.B. 142 and Foucar v. Sinclair 33 T.L.R. 318). In any case it is implicit in the denial of liability which the defendants/appellants had clearly done first in their statement of defence, later in the testimony of the only witness called by them, and finally in the address of Mr. Lardner before the High Court, that the amount of damages claimed by the plaintiff/respondent was also being denied. As had been pointed out by Lindal C.J. in Smith v. Thomas (1835) 2 Bing N.C. at p. 378:-

“The plea must be an answer to the action; there is no such thing as a plea to the damages.”

Suffice it to say, therefore, that the submission of Mr. Adesanya on this point was clearly misconceived.

Be that as it may, the judgment of the learned trial judge with respect to the quantum of damages awarded to the plaintiff/respondent, for the reasons which we have given above, cannot be allowed to stand.

The appeal in Suit No. LD/346/68 against the award is therefore allowed, the sum of 5,556pounds 13s.4d awarded by Adedipe J. as damages is accordingly set aside, and the sum of 1,769 4s.9d is substituted therefore. The defendants/appellants are awarded the costs of this appeal assessed at 100 guineas.

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SC.111/1970