KOFI AGYEN-MENSA V. KUAPA KOKOO LIMITED

JUDGMENT

AYEBI, JA

1. This is an appeal against the judgment of a Kumasi High Court which held that the termination of the plaintiff/appellant’s appointment as an employee of the defendant/respondent is not unlawful and further that adequate compensation has been paid to the plaintiff/appellant upon termination of his employment.

2. The case of the plaintiff/appellant (referred to hereinafter as plaintiff) is that on 1st April 2002, he was employed as the Administrative Officer of the Kuapa Kokoo Union. Then on 1st September 2008, he was elevated to the position of an Administrative Manager of the defendant/respondent (hereinafter referred to as defendant) company. In that position he was a member of the management team of the defendant and secretary to the Board of Directors of defendant company. As a staff, plaintiff said he worked diligently and contributed to a large measure in enhancing the fortunes of the defendant company to the admiration of the Directors and Management. He stated categorically that he had never been queried for any misconduct or non-performance before. But to his utter dismay, his appointment was on 30th December, 2011 terminated on the flimsy excuse of restructuring the company without any prior notice whatsoever. The termination letter was signed by the Chairman of the Board of Directors instead of the Managing Director, he said. The plaintiff asserted that as a member of management and secretary to the Board, there has not been any meeting at which the restructuring of the company was discussed. The plaintiff alleged his termination by the Chairman of the Board of Directors was actuated by malice/ill motive. This is because the termination at the time disabled him from completing his tenth year of service with the defendant company to qualify for Long Service Award.

3. The plaintiff contended that the termination of his employment was contrary to the terms and conditions of his employment. He asserted that having been in the employment of the defendant for almost ten (10) years, he is entitled to a redundancy package of 4 (four) months gross salary. Contending that his termination was unfair/wrongful and unjust, he claimed against the defendant as per his amended writ of summons the following reliefs:

(a) A declaration that the defendant unfairly/wrongfully terminated the employment of the plaintiff.

(b) A declaration that the purported termination of the appointment of the plaintiff by the defendant’s Board Chairman was wrongful and/or unlawful since the said Board Chairman did not have the requisite power and/or mandate to so terminate the appointment of the plaintiff.

(c) An order compelling the defendant to pay to the plaintiff a reasonable compensation (General Damages) for unfair/wrongful termination of plaintiff’s appointment.

(d) Costs.

4. The defendant in response denied that the plaintiff is entitled to the reliefs he sought against her. The defendant admitted that she terminated the plaintiff’s appointment and the termination letter was signed by the Chairman of the Board of Directors. In brief, the defendant explained that in 2011, she decided to undertake a restructuring exercise at the management level. The exercise led to the termination of the appointment of the plaintiff and others including the Managing Director of the company. So in the absence of a substantive Managing Director, the Board mandated the Chairman to act as such, hence he signed the letter terminating plaintiff’s appointment.

5. The defendant revealed that it was the same Board Chairman who approved plaintiff’s entitlements upon his termination which entitlements he collected without any protest. The defendant pleaded that the plaintiff is thereby estopped from questioning the capacity of the Board Chairman to sign the letter terminating his appointment.

6. Defendant also portrayed the plaintiff as a person not worthy of any credit. The defendant pleaded and showed that in November 2011, the plaintiff was queried by the Board Chairman about his role in the sale of fertilizers to farmers, the proceeds of which was suspected to have been embezzled by plaintiff and others. The plaintiff replied the query and later in a letter rendered an unqualified apology to the Chairman. So the plaintiff was a subject of a query before. But the termination of his appointment is not due to that query.

7. This is the gist of defendant’s defence to the claim of the plaintiff. But additional to that the defendant pleaded in paragraph 16 that “the defendant says that as against the Managing Director and the company, the plaintiff’s action must fail. This plea is a challenge to the description of the defendant on the writ of summons. The defendant as stated is “Kuapa Kokoo Ltd. per its Managing Director”. The trial judge following upon the authority ofBirch v. Asempa [1992] 2 GLR 416 which held that where there was in existence at the issue of the writ a legal person capable of answering to the description of a party on the writ, an amendment could be granted, in the exercise of his discretion, amended the description of the defendant by the deletion of “per its Managing Director”.

8. The trial judge in our view properly exercised his discretion in that regard. The amendment accords with Order 4 r.5(2)(a) of C.I. 47 which gave the court power to order any party who has been improperly or unnecessarily made a party to cease to be a party. That apart, Kuapa Kokoo Ltd. as a limited liability company, is a legal personality independent of its Managing Director. As a limited liability company, it could be sued or sue on its own. Accordingly, as held by the trial judge, it is improper to sue the defendant company through its Managing Director. In any case, the plaintiff offered no explanation why he sued the defendant company through the Managing Director and not the Board Chairman who signed the letter termination of his appointment.

9. The reliefs endorsed on the writ of summons, especially relief three implied that, on the termination of his appointment, no money however described, was paid to him at all by the defendant. Thus in his statement of claim he did not or could not state that any monies were paid to him. But when the defendant pleaded in paragraph 14 of the statement of defence that he collected his entitlements approved by the Board Chairman, the plaintiff was forced to Reply that what was paid to him did not include compensation for terminating his employment.

10. On the record, according to the Staff Clearance Form attached to Exhibit 2, plaintiff was paid a total amount of GH¢12,830.67 before he launched the action. The breakdown of the payment is:

(a) Provident Fund due - GH¢ 3,360.00

(b) Salary accrued - 1,896.75

(c) Leave converted into cash - 5,978.00

(d) Salary in lieu of notice - 1,595.92

Total - 12,830.67

Was the plaintiff then right to say that he was not compensated for the termination of his appointment with the defendant?

11. After a full trial, the trial judge dismissed the claim of the plaintiff on the grounds I stated in paragraph one (1) of this judgment. To repeat the trial judge held that the termination of the plaintiff’s employment with the defendant is not unlawful and that upon his termination, adequate compensation has been paid to him.

12. Dissatisfied with the judgment, the plaintiff appealed against it on the grounds that:

(a) The judgment is against the weight of evidence.

(b) The trial judge erred in holding that the termination of the plaintiff/appellant’s contract of employment was not wrongful in law.

(c) The judge erred in holding that the amount paid to the plaintiff after termination of his employment was adequate compensation.

(d) The judge erred in holding that the money paid to the plaintiff after termination of his employment was entitlement and benefit and same should be deducted from his four months gross salary.

13. In the written submission of counsel for the plaintiff, he argued grounds (a) and (b) together. As regards the omnibus ground of appeal, that the judgment is against the weight of evidence, it is trite learning that every appeal is a re-hearing. Thus a long line of decided cases have held that where an appellant alleged in his notice of appeal that the judgment is against the weight of evidence, the appellant is duty bound to demonstrate to the appellate court lapses in the judgment. The appellant does this by pointing out pieces of evidence on record which if the trial judge had given due consideration and/or attention, would have titled the decision in his favour. The failure on the part of the appellant to do so is similar to the failure to introduce sufficient evidence to avoid a ruling against him on an issue as stipulated in s.11(1) of the Evidence Act, 1975 (NRCD 323) – see the cases of Ampomah v. V.R.A. [1989/90] 2 GLR 28; Djin v. Musa Baako [2007/08] SCGLR 686 and Tuakwa v. Bosom [2001/02] SCGLR 61.

14. Where the appellant has discharged the burden he assumed, it is incumbent on the appellate court to analyse the entire record of appeal, take into account the testimonies and documentary evidence adduced at the trial before arriving at its decision, so as to satisfy itself that, on the preponderance of probabilities, the conclusions of the trial judge were reasonable or amply supported by the evidence – see Tuakwa v. Bossom (supra) applied in Oppong v. Anarfi [2011] SCGLR 556 and Ayeh and Akakpo v. Ayaa Iddrisu [2010] SCGLR 891.

15. The letter terminating the appointment of the plaintiff is in evidence as Exhibit A. The reason the defendant gave for terminating the plaintiff’s appointment is that the company is undergoing a restructuring exercise. In the submission of plaintiff’s counsel, he argued that the defendant could not justify the reason for the termination because defendant led no evidence to show that any restructuring exercise was on-going. Rather what defendant’s witness did at the trial is to depart from their case by saying that the plaintiff was dismissed or terminated for the embezzlement of proceeds from sale of fertilizer to farmers. Counsel urged us to hold that his termination was wrongful and unfair.

16. Again, counsel urged us to so hold because it is ultra vires the powers of the Chairman of the Board of Directors to sign the letter terminating the appointment of the plaintiff when at the same time, there was at post an acting Managing Director. It is the submission of the counsel for plaintiff that if the trial judge had given adequate consideration to these matters, he would have realized that the defendant was not able to prove her case at all and for which reason he should have held that the termination of the appointment of the plaintiff is wrongful and unfair.

17. In response to these submissions of counsel for the plaintiff, counsel for the defendant company debunked them in a well-reasoned submission based on the relevant statute law and case law thereon. The defendant herein has not counter-claimed for any relief against the plaintiff. What then is the burden of proof on her when the plaintiff is not seen to have discharged the burden of persuasion on him? None. Counsel submitted that the appointment of the plaintiff according to Exhibit A has been terminated and not dismissed. He went on to draw the difference between termination and dismissal and its effect or consequences for an affected employee. It is also noticed that counsel for the plaintiff used the term “unfair termination” and “wrongful termination” interchangeably. Counsel for the defendant distinguished the difference between them in origin and the appropriate forum to seek redress. He observed that “unfair termination” although known previously as a concept which was introduced by the Labour Act, 2003 (Act 651) which makes the National Labour Commission the first forum to seek redress and not the High Court. On the other hand wrongful termination as known in common law is termination of a contract in breach of the terms of employment and as usual the High Court is the forum for redress. It is therefore not legally appropriate to use the two terms as synonyms.

18. On the charge that the defendant has departed from its pleading when she alleged in evidence that the plaintiff was dismissed for embezzlement, counsel invoked the rule in Abowaba v. Adeshina [1946] 12 WACA 18. The rule states that:

“The object of pleadings is to compel the parties to define the issues upon which the case is to be contested and to prevent one party taking the other by surprise by leading evidence on material facts which the other has no due warning.The penalty for failing to plead a fact is the exclusion, upon objection being taken of evidence to establish it. There are certain types of evidence which are inadmissible per se, they cannot form the basis for a decision and objection to them may be taken any stage of a trial or on appeal, but in our opinion the case is different where the evidence could have been ruled out as inadmissible because it is adduced to prove a material fact which was not pleaded, has nevertheless been adduced without objection and is before the judge”.

19. Counsel submitted that at the trial, counsel for the plaintiff failed to object to the unpleaded fact given in evidence by the defendant’s witness. If that evidence was objected to at the time it was offered, the trial judge may have ruled it out. Since it formed part of the record, the trial judge was duty bound to consider it and the plaintiff’s counsel’s complaint on appeal now, is belated. This rule has been codified in section 5(1) and 6(1) of the Evidence Act, 1975 (NRCD 323). But the truth in this case is that the trial judge did not find the unpleaded evidence proved and rejected it. That evidence did not form the basis of the judgment and the plaintiff’s counsel should not have made it an issue at all in this appeal.

20. It is the further submission of counsel for the defendant that an employer is under no obligation in law to give reasons for the termination of the employment of an employee unless the contract of employment expressly made it a requirement. Counsel for the defendant referred to s.17 of the Labour Act which provided that a contract of employment may be terminated at any time by either party giving to the other party the requisite notice in accordance with the nature of the contract. So in this case if the defendant gave a reason for termination of plaintiff’s employment, defendant is not obliged to and let alone, justify it when asked. In similar manner, the plaintiff could also terminate his employment by resignation. This is because a contract of employment is not a contract of servitude.

21. Indeed this is the case where the plaintiff has complained that his contract of employment is wrongful. The position of the law as espoused by counsel for the defendant is supported by respected authorities such as Consolidated African Selection Trust Ltd. v. Nketia [1971] 1 GLR 363; Aryee v. State Construction Corporation [1984/86] 1 GLR 424; Kobeah v. Tema Oil Refinery; Akomea-Boateng v. Tema Oil Refinery (Consolidated) [2003/04] 2 SCGLR 1033 and Bannerman-Menson v. Ghana Employers Association [1996/97] SCGLR 417.

22. Apart from express requirement in the contract of employment, the only situation in which an employer must give reasons for the termination of the contract of employment of an employee is where the employee complained that the termination has been unfair under section 63(2) of Labour Act, Act 651 and under section 63(3), the employer is obliged to prove that the reason for termination was fair or it was in accordance with a fair procedure or the Act. It is for this reason that it was wrong for counsel for the plaintiff to use the terms wrongful termination and unfair termination interchangeably, counsel for defendant argued.

23. On the charge by the plaintiff that it is ultra vires the powers of the Board Chairman to sign the letter terminating his appointment, defendant’s counsel countered that the plaintiff as a dismissed employee has no right in law to mount such a challenge. He observed that such a challenge is reserved for the company itself or members of the company. Properly speaking, counsel submitted, it is the defendant company which should mount such a challenge in respect of actions on its behalf or in its name, which the company seeks to repudiate. For as held in Foss v. Harbottle [1943] 67 ER 189 applied in Pinamang v. Abrokwa [1991] 2 GLR 384, the court is precluded from inquiring into matters of internal management or, at the instance of a shareholder, interfering with transactions which though prima facie irregular and detrimental to the company, were capable of being ratified by an ordinary resolution of the company in a general meeting. So in this case if it is improper for the Board Chairman to sign the letter terminating the appointment of the plaintiff as he alleged, it is an infringement of the known practice of the company and for that matter, the company herself should take it up and not the plaintiff. As the record shows, the company has not complained about the act of the Board Chairman. It would mean that even if the Board Chairman acted without authority, his act has been ratified by the defendant company.

24. Let me say that I am in agreement with the submissions of counsel for the defendant and I uphold them in their entirety. I noted that some of the issues will not directly address the plaintiff’s grievance in this appeal but the submission is very instructive as the discussion espoused the law on the severance of the employer-employee relationship which the address on behalf of the plaintiff missed completely or misconceived.

25. Now in the case of Sarfo v. A. Lang Ltd. [1978] 1 GLR 143, the plaintiff was acquitted and discharged on a charge of stealing iron rods by the Circuit Court. Inspite of that, he was summarily dismissed by the defendant, his employer. The plaintiff sued defendant claiming special and general damages for wrongful dismissal. As regards what the plaintiff must prove to succeed, the trial judge cited with approval Morgan v. Parkinson Howard Ltd. [1961] GLR 68 at 70 where Ollennu J (as he then was) stated the law that:

“In a claim for wrongful dismissal it is essential that the plaintiff should prove the terms of his employment and prove either that the determination of the employment is in breach of the terms of his agreement, or that the determination is in contravention of the statutory provisions for the time being regulating employment. His claim cannot succeed if he fails to satisfy the court on these points”.

26. Also in the case of Nkegbe v. Africa Motors Division of United Africa Company of Ghana Ltd. [1978] 1 GLR 32, plaintiff’s conditions of service was governed by a Collective Agreement. In Article 22 it was provided that an employee “found guilty of misconduct such as dishonesty” should be dismissed summarily”. In article 29, it was provided that “an employer who wishes to terminate the services of an employee or any employee wishing to resign from his employment shall give 14 days’ notice or payment in lieu thereof if having less than 3 years continuous service and 1 months’ notice or payment in lieu thereof if the service is 3 years or more”.

27. The plaintiff therein was dismissed for stealing after twelve years of service and he sued for wrongful dismissal. In determining the claim of the plaintiff, the court opined that:

“The fundamental principle of contract law was that when the basis and conditions of the contractual relationship between parties has been reduced into writing, then the liability for the breach must be ascertained by considering the contract document”.

I will add that the rights or benefits due the employee must also be ascertained from the contract document.

28. The two cases I cited above are High Court judgments but the law as stated are good and I adopt them. Similarly, the two cases involved dismissal of the plaintiffs therein. But the law as stated equally applies to termination of employment as in the instant case. In this case, the plaintiff’s condition of service is governed by a Collective Agreement, reduced into writing, Exhibit B.

29. In paragraph 8 of plaintiff’s amended statement of claim, he pleaded that the termination of his employment was against the terms and conditions of his employment. In view of this plea, the proper complaint of the plaintiff is that his termination is wrongful, but not unfair. In that wise the plaintiff should have by evidence pointed out which provision of Exhibit B has been violated when he was terminated as a result of the restructuring exercise. But the plaintiff failed to show any such provision. Rather he threw the burden on the defendant to justify the reason for his termination, the basis of this demand he also failed to provide.

30. But as regards the condition of service of the plaintiff, the defendant was within its right under the Collective Agreement to terminate the appointment of the plaintiff when she undertakes a restructuring exercise. For in clause 16.1 of Exhibit B, it is provided that:

“If the Company finds it necessary to effect a substantial reduction in the amount of labour engaged, the Company will give a minimum of one (1) months’ notice to the employees”.

31. In clause 5.2A which provides for termination generally, the defendant is obliged to give the employee a notice according to his grade or paid salary in lieu of notice. Plaintiff herein was paid one months’ salary of GH¢1,595.92 in lieu of notice, according to the evidence on record.

32. This provision in the Collective Agreement, Exhibit C which the defendant has complied with is in accordance with the Labour Act, 2003 (Act 651), the Act which regulates employment in Ghana now. In section 17 of the Act, it is provided that, a contract of employment may be terminated at anytime by either party giving to the other party, (a) in the case of a contract of three years or more, one month’s notice or one month’s pay in lieu of notice.

33. The plaintiff having been paid the month’s salary in lieu of notice in accordance with his condition of service and the applicable law, the termination of his appointment in the circumstance cannot be said to be wrong in law. The trial judge rightly dismissed the plaintiff’s claim on that ground. Accordingly, grounds (a) and (b) of the appeal have no merit and are dismissed.

34. But we find merit in grounds (c) and (d). the two grounds relate to the compensation paid to the plaintiff after his termination. Indeed if the plaintiff’s counsel had assessed the plaintiff’s grievance properly, he should have limited the claim on the writ to payment of compensation only. For in clause 5.2, it is provided further that an employee whose appointment is terminated shall have all his entitlements paid to him. But an employee dismissed is entitled to only accrued salary and leave allowance.

35. It is seen from the Staff Clearance Form attached to Exhibit 2 that the amount paid to the plaintiff under various heads excluding the one month’s salary in lieu of notice after his termination were arrears of earned salary, leave converted into cash and provident fund. The amount clearly did not include compensation for the termination of his appointment. The trial judge appreciated the issue when he stated on the last page of the judgment at page 91 that:

“He thus pressed on the court that he had done about ten years with the defendant company and by the conditions of service (Exhibit B), he was entitled to four months gross salary upon termination of his employment. I agree with that position because the letter of employment (exhibit C) makes his employment continuous one to that of “KKFU”. He is therefore entitled to 4 months’ gross salary having served the company for more than nine years”.

36. That finding by the trial judge is the justice of the case in this matter. This is because in clause 16.2 of Exhibit B, an employee who has served between 6 to 10 years with the defendant company is entitled to 4 months gross salary as redundancy award. This is the entitlement due the plaintiff having been made redundant by the restructuring exercise. The defendant failed to pay this amount to the plaintiff. It is therefore surprising when the trial judge ordered that:

“The difference between his four months’ gross salary and the amount paid to him under this leg upon termination of his employment must be paid by the defendant company, and I so order”.

37. From the evidence on record, no amount was paid as part of the compensation due the plaintiff. The difference between the four months’ gross salary and the GH¢12,830.62 paid as ordered will result in a negative figure. It would mean that the plaintiff would have to make some refund to the defendant. I do not think that is the intendment of the order. I find it incongruous and it is set aside. Rather we order the defendant to pay to the plaintiff, 4 months gross salary as redundancy award under clause 16.2 of Exhibit B, the Collective Agreement. We also order that the defendant company pays interest on the said amount at the prevailing commercial bank interest rate from 10th January, 2012 when plaintiff’s earned arrears were paid up to the date of final payment.

38. That being so, we uphold grounds (c) and (d) of the appeal. To the extent only of this order to pay 4 months gross salary as redundancy award to the plaintiff with interest, the appeal is allowed.

SGD

E.K AYEBI, JA (PRESIDING)

(JUSTICE OF THE COURT OF APPEAL)

SGD

GERTRUDE TORKORNOO (MRS.) JA,

(JUSTICE OF THE COURT OF APPEAL)

SGD

ANGELINA M. DOMAKYAAREH (MRS.) JA

(JUSTICE OF THE COURT OF APPEAL)

COUNSEL

MR. KWABENA OBIRI-YEBOAH FOR PLFF/APPELLANT

MR. SOLOMONG OPPONG TWUMASI FOR DEF/RESPONDENT