REGIONAL MARITIME ACADEMY V J. APPIAH AMANING & ORS.

Case

by ATUGUBA, J.S.C. (PRESIDING) , MISS AKUFFO, J.S.C., LARTEY, J.S.C., ANSAH, J.S.C., ANINAKWA, J.S.C.

Summary

Employment Law—End‑of-Service Benefits—Collective Bargaining—Authority of Statutory Board—International Administrative Law—Negotiations Without Board Approval FACTS The plaintiffs, former employees of the Regional Maritime Academy (“RMA”), were declared redundant in April 1995. They claimed that following negotiations conducted by their union (TEWU) with the Ministry of Transport and Communications, an agreement was reached that the Academy would pay each employee 2½ months’ salary for every completed year of service as severance benefit. The defendant Academy, however, insisted that its Board had approved only a flat three months’ salary, irrespective of length of service. The High Court dismissed the plaintiffs’ claim, holding that RMA, being an institution of international character created under PNDCL 33, was governed solely by its Board whose approval was necessary to validate any agreement on remuneration. The Court of Appeal, by a majority, reversed this decision, holding that a binding agreement had been concluded. On further appeal, the Supreme Court held that under sections 7 and 17 of PNDCL 33, the Board of Governors had exclusive authority to determine conditions of service and remuneration. None of the exhibits relied on by the plaintiffs (including Exhibits A, B, C, and A8) demonstrated that the Board had approved the alleged 2½‑month rate. Statements attributed to the Principal could not bind the institution, since he had no delegated authority. Negotiations do not become binding unless accepted by the parties, and there was no evidence of Board acceptance. The alleged agreement was therefore unenforceable

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J U D G M E N T

LARTEY, J.S.C.:

This is an appeal against the majority decision of the Court of Appeal, reversing the decision of the High Court, Accra which had entered judgment for the defendant against the Plaintiffs.

The brief facts according to the respondents (henceforth referred to as the plaintiffs) are that they were employees of the appellant (henceforth also referred to as the defendant) until on or about April 1, 1995 they were retrenched and declared redundant at a time they had all served the defendants for varying numbers of years. They averred they were all members of the Teachers and Educational Workers Union (TEWU) of the Trades Union Congress of Ghana. They alleged that in or about 1994 the defendant decided to carry out a retrenchment exercise, mandating the Minister of Transport and Communications to handle the exercise on its behalf. According to the plaintiffs TEWU negotiated on their behalf with officials of the Ministry of Transport and Communications of Ghana whereby an agreement was reached that the plaintiffs would each receive from the defendant two and half months’ pay as end-of-service benefits for each completed year of service. In the view of the plaintiffs, the defendant having resiled from the said agreement, was insisting on paying the plaintiffs a flat amount of three months pay each regardless of the number of years of service rendered to the defendant. On these facts the plaintiffs on May 16, 1995 issued their writ of summons claiming:

“(a) A declaration that the plaintiffs are entitled to end-of-service benefit calculated at 2½ months salary for each year of service to the Defendant by the Plaintiffs.

(b) An order upon the Defendant to pay the Plaintiffs end of service benefit calculated at 2½ months salary for each year of service to the Defendant by Plaintiffs.

(c) Interest on the sum due to each Plaintiff from the 1st day of April, 1995 to the date of final judgment”.

In its defence the defendant averred that the Regional Maritime Academy is governed by an agreement drawn between the Government of Ghana and the Ministerial Conference of West and Central African States on Maritime Transport. And in accordance with article 6(2) of the agreement the terms of contract of all employees of the Academy is governed by what is termed ‘International Administrative Law’. Under article 13(3) the salaries of all regular employees are quoted in US dollars but paid the cedis equivalent of the quoted US dollars. The defendant finally averred that its action was based on the decision of the Board of Governors of the RMA which in turn acted in accordance with the International Document of the Academy which specifies the conditions of service of its employees.

At the trial the plaintiffs called one witness to give evidence on behalf of all the plaintiffs. He testified that as employees of the defendant institution the plaintiffs belonged to the Teachers and Educational Workers Union of T.U.C. According to the witness at the end of the restructuring exercise the principal of the institution gave the names of the workers whose services were no longer needed, and were to receive only three months basic salary as end-of-service benefit notwithstanding the number of years each of the plaintiffs had served. In the course of their evidence, the witness tendered exhibit ‘A’, i.e. the Collective Bargaining Certificate, which in their belief entitled them to conduct collective bargaining on behalf of its members. Exhibit ‘B’ was a letter written by the local union of TEWU to the General Secretary of TEWU of T.U.C. in which they complained of their dissatisfaction with the outcome of a previous meeting held on 12 October, 1994 in respect of the retrenchment exercise of the R.M.A. Exhibit ‘C’ reflects the minutes of the meeting of 10th January, 1995 on the same redundancy exercise carried out by the RMA. It is significant to note from paragraph 8.0 of the exhibit that the attention of the meeting was drawn to the Board’s rejection of the 2½ months salary for every completed year of service agreed upon during the negotiations on the severance award. In paragraph 8.1 the explanation given was that the Board of RMA at its 18th session rejected the rate outright, and further drew the attention of the Ministry of Transport and Communications to the Academy’s Convention which spelt out the conditions for such purposes.

After examining the evidence assembled before her the trial judge held that since RMA is an institution with an international status the terms of its employees are regulated by RMA conditions of service, and that the plaintiffs have no bargaining agreement with RMA. She also held that the agreement the plaintiffs were relying upon for their claim has no binding effect on the defendant institution, and that whatever bargaining power the plaintiffs had with Ghana Nautical College ceased when that college was dissolved and replaced by RMA. The judge was of the opinion that the plaintiffs’ claim is based on nothing and cannot be sustained. Consequently she dismissed the claim and entered judgment for the defendant.

At the Court of Appeal by a majority of two to one the trial court’s judgment was overturned. It is against the majority judgment of the Court of Appeal that the defendant launched the instant appeal to this court on a number of grounds and which were filed on different occasions. The first in time to be filed was on 8 August, 2001, which featured in the notice of appeal and which included the usual omnibus ground of the judgment being against the weight of evidence. Then came the next group of grounds of appeal numbering not less than seven and which were described as additional grounds. The last group, termed further additional grounds of appeal, was said to be in substitution for the earlier grounds filed on 8 August, 2001 and 28 March, 2002. In reality only the omnibus ground and three of the latter grounds were together argued. Those three were couched as follows:-

“1A The learned majority at the Court of Appeal erred in law when they held that there was valid agreement by the Defendant/Respondent/Appellate (SIC) to pay 2½ months salary per each year of service at the Regional Maritime Academy, to the Plaintiffs/Appellants/Respondents.

1B. The learned majority at the Court of Appeal erred, when it held that there was a conclusive agreement between the parties, in the light of Exhibit ‘A8’ tendered by the Plaintiffs as fresh evidence in the Court of Appeal.

1C. The learned majority of the Court of Appeal erred in their conclusion that the Defendant/Respondent had admitted expressly that it agreed to the 2½ months salary per each year of service at the Regional Maritime Academy and therefore also erred when they had held that the burden fell on the Defendant/Respondent/Appellant to establish that Plaintiffs/Appellants/Respondents had rejected the said agreement”.

I desire to dispose of this appeal briefly by calling in aid the law which brought into existence the Regional Maritime Academy, the defendant herein, since many of its provisions bear direct relevance to certain aspects of the instant litigation. That law is of course the Regional Maritime Academy Law, 1982 (P.N.D.C.L. 33), which repealed the Regional Maritime Academy Decree, 1979 (A.F.R.C.D. 70) and revoked the Ghana Nautical College Instrument, 1970 (L.I. 677). It further dissolved the Ghana Nautical College established by the said L.I. 677. The importance of section 7 of P.N.D.C.L. 33 deserves to be reproduced in part as follows:

“7(1) The Board which shall be the governing body of the Academy shall be autonomous and accorded full international status.

(2) Without derogation from its functions under subsection (1) the Board shall have power –

to determine and supervise the finances of the Academy”.

The language of section 7 is very clear and unambiguous. It singles out the Board of the Academy to be its governing body. It also guarantees the Board’s autonomy in all matters affecting the Academy and accords it an international status. It categorically gives power and authority to the Board to determine and supervise financial matters of the Academy. If therefore there arises the need to determine severance pay as end-of-service benefit to its employees, for instance, it is the Board which bears full legal responsibility to undertake such exercise.

Section 17 of P.N.D.C.L. 33 also reads:-

“17(1) The rates of remuneration and other conditions of service of members of staff and of all employees of the Academy shall be determined by the Board.

(2) The Board may make bye-laws to provide for the contribution by the Academy to any superannuation or other similar fund instituted for the benefit of the staff and employees of the Academy”.

It is my view that these two provisions quoted above need to be highlighted to demonstrate the international nature of the defendant/institution, its autonomy over academic, financial and administrative matters, the extent of the Board’s functions as well as the exclusive or unique authority of the Board in relation to remuneration and conditions of service of the Academy’s employees. I venture to suggest that it is in the light of the foregoing that a proper and effective evaluation of the plaintiffs’ claim can be made.

The crux of the plaintiff’s case is that following the retrenchment of staff exercise in or about 1994, their end of service benefit was calculated at three months’ salary and paid to them irrespective of the number of years each had been employed by the defendant. They were dissatisfied with the quantum whereupon TEWU of TUC entered into negotiations with officials of the Ministry of Transport and Communications as well as other stakeholders. An agreement was reached whereby the defendant was to pay to each of the plaintiff an award calculated at two and a half months salary for each year of service to the defendant. The defendant has reneged on the agreement and has refused or ignored to pay the end of service benefit.

By “agreement” I presume the plaintiffs are referring to the contents of exhibit ‘A8’ dated 13 October, 1994 and exhibit ‘C’ dated 10 January, 1995. In exhibit ‘A8’ there is a paragraph at page 109 of the record of appeal which states that the Principal confirmed that he would be in a position to pay the amount involved, i.e. ¢93 million provided the payment is spread over a period of time. Even though this was attributed to the Principal, there is no evidence that the Principal was mandated by the Board of Governors to make a commitment to pay. In exhibit ‘C’ there is no evidence of any agreement on the part of the defendant to pay anything to the plaintiffs as a consequence of the alleged negotiation. The case of OBENG V. MFRAMAH [1987-88] 1 G.L.R. 548, C.A. is one of negotiations for a settlement. Although I concede that it was decided under customary law, I believe the principle is flexible enough to apply to the instant case. At page 551 thereof the relevant portion of the proposition as quoted from ZOGLI V. GANYO [1977] 1 G.L.R. 298 pp. 300-301 reads thus:-

“It is well known that the result of a negotiation for settlement is not binding on the parties until it is accepted by both. But once it is accepted, it is as binding on them as an arbitration award”.

In the case before us there is nothing to show that the Board as the governing authority of the defendant accepted the outcome to any negotiation and therefore it cannot be bound by the contents of the two exhibits.

It is also arguable that although the Principal attended the meetings called by the Ministry of Transport and Communications in the instant case there is no evidence to show that the Board delegated its powers to negotiate with the plaintiffs. On the authority of NARTEY-TOKOLI V. VOLTA ALUMINIUM CO. LTD. [1987-88] 2 G.R.L. 533, C.A. it is safe to hold that the Principal lacked the capacity to act for the Board, and whatever agreement he might have reached at those two meetings was a nullity and unenforceable against the Board and the defendant.

What irresistibly flows from the meetings as per exhibits ‘C’ and ‘A8’ is that, no conclusion was arrived at. The so-called negotiations never ripened into fruition. In exhibit ‘A8’ appears the rubric “Chairman’s Remarks”, and under it appears the following words:

“The Chairman thanked members for a fruitful discussion and promised to communicate the outcome of the meeting to the Minister for the Board of Governors consideration and approval”.

Indeed there is no evidence on the record that the Minister communicated the outcome of the meeting to the Board; and even if he did, there is nothing to show that the Board gave any approval to what transpired at the meeting. The legal effect of such a scenario is demonstrated in KOGLEX LTD. V. FIELD [1998-99] S.C.G.L.R. 451 where Atuguba, J.S.C. had this to say:-

“The plaintiffs stressed the fact that all the terms of agreement were thrashed out at the meeting of 14 September, 1985 … But the crucial matter to consider is not whether the terms of agreement were settled but rather when were the terms intended to have contractual effect … The parties, on the facts of this case, intended only a written and signed agreement to bind them as a contract”. (emphasis mine).

Therefore the issue which arises is even if the so-called negotiations were effectively concluded, the terms of those negotiations can never come into effect until the Board gives its approval. As long as the Board failed to give its approval, whatever terms were arrived at remained moribund and unenforceable.

It is on account of the foregoing that I think the Court of Appeal erred in its majority decision. I will allow this appeal and restore the judgment of the trial High Court and the minority decision in the Court of Appeal. I enter judgment for the defendant in this appeal.

F. M. LARTEY