CHATLANI V. HAROUTUNIAN

JUDGMENT

ABBAN J.

The plaintiff herein is claiming the following reliefs:

“(1) ¢1,200.00 being damages for wrongful dismissal;

(2) ¢1,733.32 being leave salary due and owing by the defendant to the plaintiff; and (3) ¢2,320.00 being gratuity due and owing by the defendant to the plaintiff.”

All the parties are foreigners who have been living in this country for a considerable number of years. The defendant has been a general merchant, trading in all sorts of merchandise. He had a retail store in Accra and in 1959, he employed the plaintiff as a store-keeper in that store. In the course of time, the defendant promoted the plaintiff to the status of a manager, and by May 1962, the plaintiff was in full control of the defendant’s business in Ghana on a monthly salary of ¢200.00.

The defendant had other business interests in England and he was therefore partly living in Manchester. The plaintiff said he worked for nearly ten years without going on leave, even though by the terms of his employment he was entitled to go on leave every year and he always applied to the defendant to allow him to take the said leave. The defendant’s excuse for not allowing the plaintiff to go on leave was that there was no one to relieve the plaintiff.

During the latter part of 1968, there was stock-taking of the goods and cash in the store; and after drawing up the balance sheet it was found that the cash was short by ¢6.91 and the stock was also short by ¢872.84. Both parties signed the balance sheet, acknowledging the shortages; but on or about 31 January 1969, the defendant wrote to the plaintiff dismissing the plaintiff from the defendant’s business. The letter of dismissal, exhibit A, reads as follows:

“Selwyn Market Street, P.O. Box 392, Accra, Ghana, W.A. 31 January, 1969. Mr. Gobindram Chatlani, Accra. Dear Mr. Gobindram, In view of the considerable amount of shortages discovered both in cash and goods entrusted to you, please note that your employment is terminated as from 31 January 1969. Yours faithfully, (Sgd.) Leon Haroutunian.”

The plaintiff alleged that he alone was handling the stock amounting to over ¢150,000.00. The plaintiff acted as a store-keeper, a book-keeper, a salesman and a manager at the same time; and even though the plaintiff complained to the defendant that the burden was more than the plaintiff could bear, the defendant refused to employ additional hands. There were other employees working in the store but they were not in any responsible position so far as the defendant’s business was concerned. Since those persons were not responsible for anything that went wrong in the store, they could engage in pilfering and the plaintiff attributed the cause of the shortages to petty pilfering in the store.

It was further contended by the plaintiff that the real reason for the dismissal was not because of the shortages. He said the defendant submitted false returns of his business, for the years 1962-66, to the Income Tax Department, and in consequence thereof the defendant evaded payment of tax amounting to ¢110,480.00. The Income Tax Department, in due course, discovered the fraud and penalties were exacted from the defendant who was called upon to pay the said ¢110,480.00. The plaintiff said the defendant suspected the plaintiff to be the person who revealed the falsity of those returns to the Income Tax Department and it was for that reason that the defendant summarily dismissed the plaintiff. The plaintiff therefore contended that inasmuch as he was not given notice of the termination, or salary in lieu of notice, his dismissal was wrongful.

I should remark that the defendant did not dispute that the Income Tax Department called upon him to pay the said penalties for not sending correct returns for the period in question. The defendant said he gave his accountants correct figures and information which should have enabled the accountants to submit correct returns, but the said accountants were negligent in preparing those returns. The defendant therefore put the blame for submitting false returns on his accountants. However, the defendant denied that the plaintiff’s dismissal had anything to do with the income tax case. He insisted that the plaintiff was dismissed because of the shortages.

The defendant averred that he employed the plaintiff in 1959 as a store-keeper on a salary of ¢160.00 a month. The plaintiff was made responsible for the goods and cash in the store. There were other clerks and store assistants who were employed by the defendant to work with the plaintiff in the store. There was also a chief clerk whose duties were to clear goods from the customs, to keep abstracts, stocks, supplies and the delivery books. The defendant employed both day and night watchmen to watch the store. So that, according to the defendant, it was not true that the plaintiff alone was handling the business of the defendant. As regards the plaintiff’s conditions of service, the defendant contended that he never agreed to give the plaintiff one month’s leave every year and the plaintiff himself did not, during his employment, make any demand to go on leave.

A counterclaim was put in by the defendant for the shortages discovered after the stock-taking of 1968, and which were the cause of the plaintiff’s dismissal. There were other shortages discovered at previous stock-takings. The defendant said the plaintiff took from the cash sales on different dates ¢600.00, ¢200.00 and ¢80.00, respectively, for the plaintiff’s personal use without the knowledge and consent of the defendant, despite earlier warnings which the defendant had given to the plaintiff. On each occasion, the plaintiff did not record the amount so taken in any of the accounts books. It was after the defendant had discovered the absence of the cash during stock-taking that the plaintiff produced chits or receipts, purporting to show that the plaintiff had taken the amount as a loan.

The plaintiff admitted taking the sums in question, but he said he obtained permission from the defendant before taking the money and that he left those chits in the till and not that he produced them to the defendant during stock-taking. The total amount taken by the plaintiff was ¢880.00 and at the time of the dismissal, the plaintiff had refunded ¢440.00 remaining ¢440.00 still outstanding. The defendant is also claiming the refund of the said ¢440.00 in this action. The defendant further averred that the plaintiff gave unauthorized credits to a certain Indian, called Sawlani, and to a firm, Kingsley Commercial Enterprise owned by one Kingsley Addy. The sums involved in those credits were not paid and the defendant is now claiming the same from the plaintiff. The total amount the defendant is counterclaiming, including the shortages discovered long before the stock-taking, is ¢2,644.05.

Before considering whether or not the plaintiff was wrongly dismissed, I will first determine the terms or the conditions under which the plaintiff was employed. There was no written service agreement between the parties. The evidence clearly showed that the defendant had been in the habit of employing managers for his business, but never entered into written agreements with them. I think the defendant did that by design. For, within 35 months the defendant was able to dismiss four managers; and the absence of written service agreements, as well as the doubtful terms of the oral agreements which the defendant had with those managers, greatly assisted the defendant to escape court action.

The defendant was, however, not so lucky in the case of one Medz-Moroukian. The defendant, having unlawfully terminated the employment of the said Medz-Moroukian, was sued for a breach of contract: see Medz-Moroukian v. Haroutunian [1963] 2 G.L.R. 7. There was no written contract and the defendant, as was characteristic of him, created doubts as to the terms of the oral agreement. But that gentleman was fortunate to have kept the correspondence which had passed between him and the defendant and from those letters the court spelt out the terms of the oral agreement and came to the conclusion that the defendant had committed a breach of contract by terminating the employment of the said Medz-Moroukian in the way he did. The defendant was therefore found liable and condemned in damages. I have referred to the Medz-Moroukian case (supra) to show the attitude of the defendant as far as the making of written agreements with employees was concerned.

In the present case, the absence of a written service agreement enabled the defendant to deny even terms which are normally present in a service agreement of this kind. On the evidence, however, I find that the defendant first employed the plaintiff as a store-keeper and later as a manager; and that the parties orally agreed on the terms of the plaintiff’s employment. The terms of the employment were that the plaintiff’s salary was to be paid at the end of every month and the plaintiff was to go on one calendar month’s leave every year. I must make it clear that if I had found that there was no express agreement about the leave, I would still have held that there was such an implied term in the oral agreement, because the previous managers of the defendant’s business and other employees were all, according to the defendant, entitled to go on leave. The defendant said he had oral service agreements with his employees like Mr. Okae (the chief clerk) and Mr. Jones Cantil (an assistant store-keeper), to go on annual leave. All those persons were working under the supervision of the plaintiff. The defendant wants this court to believe that those employees who were subordinate to the plaintiff were entitled to go on leave every year. But the plaintiff, the manager of the defendant’s whole business, was not entitled to that privilege.

I found it difficult to understand why the defendant made every attempt to deny even an obvious truth. I do not believe that the defendant never agreed on an annual leave with the plaintiff. The defendant agreed that the plaintiff was to be entitled to one month’s leave every year. The plaintiff was all the time willing and prepared to go on leave, and in fact insisted on taking his said leave. It was rather the defendant who pleaded with the plaintiff not to take his leave, because there was no one of managerial status in the defendant’s employment who could relieve the plaintiff while on leave. The clerks could not hold the fort if the plaintiff went on leave and the defendant, who seems to be a miser, did not bother to employ another person as a manager to relieve the plaintiff.

Under those circumstances, any sensible and reasonable employer, in the position of the defendant, would have paid the plaintiff a month’s salary in lieu of leave at the end of every year. But the defendant, as it was typical of him, refused to pay the said leave allowance; and I hold that the plaintiff is entitled to recover the accumulated leave allowance up to the date on which his employment was terminated.

Concerning the termination of the plaintiff’s employment, I find that there was no express term dealing with the conditions under which the services of the plaintiff could be terminated by the defendant. Consequently in the absence of misconduct the plaintiff’s employment was determinable at any time by either party on giving reasonable notice: see Appiah v. Akers Trading Co. [1972] 1 G.L.R. 28 at p. 34 and Ogoe v. L’Air Liquide Co., Ltd. [1973] 1 G.L.R. 195 at p.199. Considering the nature of the defendant’s business, and the fact that the plaintiff’s status was that of a manager, I think the reasonable length of notice, in this particular case, should have been at least, three months or three months’ salary in lieu of notice.

Nevertheless, the most crucial issue is this: did the plaintiff’s conduct justify termination without the said three months’ notice? The plaintiff admitted that the business of the defendant incurred shortages of ¢872.84 in goods and ¢6.91 in cash when the stock was taken at the end of 1968. In his reply, paragraph (5), the plaintiff stated that up to date, the total shortages incurred over the years was ¢1,637.33. The defendant in his statement of defence put the total shortages at ¢2,644.05. I do not accept the figure given by the defendant. The defendant seemed to have included in his figure the credits given to Sawlani and Kingsley Addy of Kingsley Commercial Enterprise. I find that in the case of Sawlani, the credit was given by the defendant himself; and in respect of Kingsley Addy the credit was in fact authorized by the defendant. The plaintiff cannot therefore be held liable for those credits. In my view, the total amount of shortages was not more than ¢1,637.33 as admitted by the plaintiff in his reply. It may then be asked, was the defendant right in dismissing the plaintiff for those shortages?

In his evidence, the defendant stated:

“Stocks were being taken at intervals of two months or three months. On previous occasions I had warned the plaintiff to be careful as we could not go on running into shortages; and on each occasion the plaintiff promised faithfully to be careful. In spite of his promises he still showed shortages in goods and cash, so I decided to terminate his employment.”

Taking into account the huge yearly turnover of the defendant’s business which turnover it appeared to me to be in the region of ¢140,000.00, the defendant considered those shortages or deficits negligible; and he seemed to have written them off. Because, on the defendant’s own showing, each time a deficit was discovered the defendant just warned the plaintiff to be careful and he never asked the plaintiff to make good any of those deficits. Neither did the defendant even make any attempt to deduct the amount involved in those deficits from the plaintiff’s salary.

I think because the plaintiff knew he was not to be held responsible for making good deficits in the defendant’s business, the plaintiff adopted a very relaxed attitude towards his work. It is true that the volume of work in the defendant’s store was large; and it is also true that the shortages, especially in goods, might be due to petty pilfering engaged in by the other employees of the defendant working in the store. But that did not mean that the plaintiff should relax in his vigilance and should be indifferent and continue to show deficits at every stock-taking. I am of the opinion that the series of deficits tend to make the plaintiff’s competence suspect. Those deficits portrayed the inefficient and incompetent manner in which the plaintiff was handling the defendant’s business and, in the circumstances, the defendant was justified in relieving the plaintiff of his post summarily.

I must say in passing that it is clear on the evidence that the plaintiff, on three different occasions, took money from the defendant’s business without first obtaining the defendant’s permission or consent. The plaintiff never even made any record thereof in his account books. On each occasion, it was after the defendant had checked the cash and had discovered the shortage that the plaintiff produced a chit or a receipt purporting to show that he had borrowed money from the cash sales. The total amount was ¢880.00: see exhibits 15, 20 and 21. The conduct of the plaintiff on those said occasions was highly suspicious; and to me the plaintiff was clearly guilty of untrustworthy conduct and this was misconduct which called for immediate and summary dismissal: see Ogoe v. L’Air Liquide Co., Ltd. (supra). But unlike the defendant in Ogoe’s case, the defendant in the present case did in fact condone the plaintiff’s said misconduct, and allowed the plaintiff to continue managing the business but to pay back the so-called loan of ¢880.00; and at the time of his dismissal the plaintiff had refunded ¢440.00

As I have already found, the defendant did not dismiss the plaintiff because of the misconduct referred to above. But I have made reference to the said misconduct purposely to show that at the time of the plaintiff’s dismissal not only had the plaintiff deteriorated in efficiency and had become incompetent as a manager, but also his honesty for that post of trust had become questionable. However, since the dismissal of the plaintiff was justified, the plaintiff cannot recover damages, neither can he succeed in his claim for gratuity. It is my view that payment of gratuity to an employee is dependent upon faithful and efficient discharge of services to the employer and upon the employee leaving the employment on grounds other than misconduct. In any event, I find that it was not one of the terms of the agreement that the plaintiff was to be entitled to gratuity on the termination of his services.

I earlier on made mention of the counterclaim in which the defendant is claiming from the plaintiff the total amount of shortages which his business incurred over the years. It was not shown whether the counterclaim was founded in contract or in tort. As a matter of fact, I do not see the legal basis for it. There was no evidence that the plaintiff misappropriated the goods and cash involved in the shortages; neither was it shown that the plaintiff gained any financial benefit as a result of those shortages. On the contrary, as I have already found, it was the other employees of the defendant who rather took advantage of the plaintiff’s lack of proper supervision and themselves engaged in petty stealing of the goods in the store; and I am definitely certain that that was, at least, one of the causes of the shortages in goods.

Furthermore, it was never one of the terms of the oral agreement that the plaintiff was to be liable to make good any loss or deficit which the defendant’s business would incur. In other words, it was never agreed between the parties, expressly or impliedly that, shortages in the business were to be debited to the plaintiff’s account. The shortages discovered were signed by both the plaintiff and the defendant. But the mere signing of the balance sheets which showed shortages did not, without more, mean that the plaintiff bound himself to refund the sums involved in the shortages.

Some of the deficits occurred some years before 1968, and on no occasion did the defendant demand from the plaintiff payment of the sums involved in those deficits. All that the defendant did on those occasions was to advise and to “warn the plaintiff to be careful.” The question of asking the plaintiff to refund the shortages did not arise and was never discussed, because both the defendant and the plaintiff knew that it was not part of the service agreement that deficits in the business were to be the liability of the plaintiff. I am certain that the defendant, in submitting his balance sheets to the Income Tax Department as part of his returns, showed those shortages as moneys not refundable by anybody and therefore a total loss to his business; and the Income Tax Department must have taken account of those losses when assessing the defendant’s tax liabilities for those years. At any rate, there is no evidence that the defendant declared in his returns to the Income Tax Department that the plaintiff was one of his debtors as a result of those losses.

The counterclaim is, indeed, most inequitable. After all, not every year did the defendant’s business incur losses or deficits. The promotion of the plaintiff from the status of a store-keeper to that of a manager with an increase in salary, from ¢160.00 to ¢200.00 a month, was clear testimony that the plaintiff was at one time efficient, and that the business showed some profits some time ago. The defendant, in those ‘glorious days’ enjoyed those profits alone and never gave any portion thereof to the plaintiff. But now the defendant wants his losses to be borne by the plaintiff. To the defendant all his business losses must be paid for by another person, no matter how the losses came about, while he exclusively enjoyed the profits. So far as the defendant was concerned there ought to be no profits and loss in his business. It should be profit all the time. I think the defendant is a greedy person and I do not understand why, with his long experience in trading, he should close his eyes to the well-known fact that deficits are some of the occupational hazards in trading.

The defendant, as I have said, appears to be a very callous person who is out to cheat at the least opportunity. Having dismissed the plaintiff, quite properly, for bringing about losses in his business, and which dismissal was the penalty the plaintiff had to pay for the said losses, the defendant again wants to re-coup those losses from the plaintiff. This “Shylock” attitude of the defendant must not be countenanced.

It may also be pointed out that in his letter of dismissal, the defendant did not make mention of payment of deficits by the plaintiff. Six months after the plaintiff had been dismissed, the defendant’s solicitors, on the instructions of the defendant, wrote to the plaintiff demanding the return of books and documents concerning the business of the defendant, which books and documents were alleged to be with the plaintiff. The defendant himself wrote exhibit 17 to the plaintiff in June 1969. Nowhere in all these letters was it stated that the plaintiff was liable to pay for the losses in the defendant’s business and therefore payment should be made by the plaintiff. In fact the defendant, knowing perfectly well that he was not entitled to recover from the plaintiff deficits incurred in the business, would not have dreamt of making such a claim, if the plaintiff had not brought the present action. Because before the writ was issued, the defendant was rather thinking of giving money to the plaintiff to pay his passage back to India.

I therefore hold that the defendant is not legally entitled to his counterclaim, save and except the sum of ¢440.00 being the balance of the “loan” which the plaintiff took from the defendant while the plaintiff was in the defendant’s employment. For the plaintiff, the only amount which he can recover from the defendant is the accumulated leave allowance of ¢1,733.32. It was a benefit which had already accrued to him at the time he was dismissed.

In the circumstances, judgment is entered for the plaintiff for the sum of ¢1,733.32 with costs assessed at ¢450.00. On the counterclaim, judgment is hereby entered for the defendant for ¢440.00 with costs of ¢80.00.

SGD

ABBAN J

JUSTICE OF THE HIGH COURT

COUNSEL

JOE REINDORF FOR THE PLAINTIFF

JAMES QUASHIE-IDUN FOR THE DEFENDANT.