S. N. K. NUNOOFIO V. FARMERS SERVICES COMPANY

JUDGMENT

ARYEETEY, J.A.

A background to this appeal is as follows: In December 1986 the plaintiff/respondent was employed as Commercial Manager of the defendant/appellant company and his appointment was confirmed exactly a year later. However by letter dated 21st February 1997 the company demoted him to the rank of Area Commercial Officer. The matter did not end there. On 5th January 1998 the defendant/appellant company by its Chairman of Board of Directors wrote a letter, exhibit C to the plaintiff/respondent terminating his appointment. I would quote exhibit C in full. It reads:

“Dear sir,

TERMINATION OF APPOINTMENT

This is to inform you that your services with the company will no more be needed and consequently your appointment with the company is terminated with effect from 15th January 1998. The decision to terminate your appointment is being taken to safeguard the interest of the company by ensuring its smooth and unfettered operations.

The Board has observed that:

(1) Since your inability to get the position of Managing Director, which you vied for, with the present Managing Director you see every action taken by him as aimed at victimising you.

(2) You Find it impossible to work under the general manager who in your own claim has been your subordinate officer for the last 10 years and who has suddenly been ‘promoted' over and above you. Refer your letter dated 24th February 1997.

(3) Your demotion to Area Commercial officer arising from poor performance is seen by you as the work of the Managing Director, as a result of which you are not prepared to take instructions from him or the General Manager.

The policy of the company is to derive optimum performance from its employees but it is sad to note that since the interviews you appear to be frustrated and instead of putting in your best you are rather sabotaging the efforts of the new management team. This cannot be accepted.

Further the Board has observed that in taking issue with the company in the recent past in certain quarters and with some persons over purely company internal matters you are in serious breach of the established code of conduct.

In accordance with section 63 therefore of the Senior Staff Conditions of Service, your appointment with the company is terminated. The Accounts Manager is hereby advised to pay you 2 months salary in lieu of notice and to pay you all entitlements due you in accordance with the Senior Staff Conditions of Service. Any indebtedness owed the company will similarly be deducted from your entitlements.

Thank you for your services over the years.

Yours faithfully

For FASCOM (U.R.) LIMITED

J. I. ODZEYEM

CHAIRMAN

BOARD OF DIRECTORS”

Not satisfied with this the respondent brought an action in the High Court asking for the following reliefs:

“(1) A declaration that the demotion of the plaintiff to the rank of Area Commercial Officer was unwarranted and to that effect wrongful.

(2) A declaration that the demotion of plaintiff to the rank of Area Commercial Officer on the ground of inefficiency was a disciplinary action, which called for disciplinary procedure prior thereto.

(3) A declaration that the demotion of the plaintiff from the rank of Commercial Manager to that of Area Commercial Officer was a breach of terms of plaintiff’s employment with the defendant company.

(4) A declaration that the termination of the plaintiff's services with the defendant company was wrongful, in that the reasons assigned for such termination called for a disciplinary procedure prior there to.

(5) Damages for wrongful termination of plaintiff’s status from that of Commercial Manager to Area Commercial Officer.

(6) Damages for breach of plaintiff’s terms of employment.

(7) Damages for wrongful termination of plaintiff’s services to the defendant company.

(8) An order of the court that the plaintiff be paid salary and other allowances due to plaintiff as a Commercial Manager from date of his demotion to date of judgment in this suit.

(9) An order that plaintiff be paid his salary and other related allowances from date of termination of his service with the defendant company to date of final judgment in this suit.”

The judgment of the court below declared the demotion of the respondent from the rank of Commercial Manager to the rank of Area Commercial Officer as well as his eventual termination as null and void. The only ground of the appeal is that the judgment is against the weight of evidence.

In his judgment at page 55 of the record of appeal the learned trial judge made the following observations:

“Now 'Termination' and 'Dismissal' are different considerations under the Terms of Employment, exhibit A. 'Dismissal is provided under section 54 (A); and 'Termination' is provided under section 63 of exhibit A. These, in my view, are not synonymous terms. Under section 54(A) the only authority of the company, which could dismiss a top management staff like the plaintiff was the Board. Under section 63, 'the employment of an officer may be terminated by the company at two months notice or by payment of two months salary in lieu of notice'. Now as to which authority of the Company could terminate the appointment of a top Management Staff like the plaintiff, section 63 is silent. But taking a queue from section 54(E) in respect of dismissal of top-management Staff, I can safely say that the Board was the only authority of the company that could terminate the appointment of a top-management staff like the plaintiff”.

Before I go on further with the judgment in this appeal I think it would be appropriate to quote in full section 54(E) of SENIOR STAFF CONDITIONS OF SERVICE, exhibit A. It is as follows:

“DISCIPLINARY PROCEDURE

(a) The disciplinary authority shall be as defined in the personnel manual. Where the disciplinary authority considers that a formal disciplinary action should be instituted against an officer he shall either prefer written charges against the officer who shall be required to answer such charges within such period as may be specified by disciplinary authority.

Where the officer fails to answer the charges within the specified period the disciplinary authority shall, if it is satisfied that in the light of the facts upon which the charges are based, the officer is guilty of the offence, impose the appropriate punishment on the officer.

(b) Where the officer answers the charge, the disciplinary authority will determine the appropriate action/measures to take in the circumstances.

(c) Where the offence appears grave to the disciplinary authority he may cause a full-scale investigation to be made either through the appointment of an internal committee of enquiry or an agency as he may consider appropriate.

(d) Where an internal committee of enquiry or an agency or another person is appointed to investigate the offence, the officer who is being investigated shall be given the opportunity to be heard and to defend himself.

(e) The report of an enquiry, agency or another person shall be declared null and void if the officer was denied a hearing and was not given the opportunity to defend himself unless the officer being investigated, refuses, declines, absconds or shows unwillingness to appear before the committee, agency or sole person appointed to investigate.

(f) Where such a committee, agency or another person recommends dismissal or termination, this will be placed before the disciplinary committee for further action.”

I quite agree with the learned trial judge that there is a marked difference between “Termination” and "Dismissal" under exhibit A. Whereas under section 54(E) of exhibit A both “Dismissal" and "Termination" would have to be preceded by a "Disciplinary Procedure”, under section 63 “Termination” would not need to follow “Disciplinary Procedure”. When we come to “Demotion”, which is relevant in this appeal, no mention of it is made directly under section 54(E). However in looking for the appropriate part of exhibit 54(E) to fit “Demotion” into what comes to mind is section 54(E) (a), which could find support with section 54(E) (g). As quoted above they are as follows:

“(a) The disciplinary authority shall be as defined in the personnel manual. Where the disciplinary authority considers that a formal disciplinary action should be instituted against an officer he shall either prefer written charges against the officer who shall be required to answer such charges within such period as may be specified by disciplinary authority.

Where the officer fails to answer the charges within the specified period the disciplinary authority shall, if it is satisfied that in the light of the facts upon which the charges are based, the officer is guilty of the offence, impose the appropriate punishment on the officer.

(g) Where such a committee, agency or another person recommends dismissal or termination, this will be placed before the disciplinary committee for further action.”

According to section 54(E) (a) “the disciplinary authority shall, ... impose the appropriate punishment on the officer”. Which means the disciplinary authority would be entitled to impose the punishment of demotion on an officer who is guilty of the offence with which he is charged. Section 54(E) (g) makes it clear that it is only where recommendation for dismissal or termination comes from a body other than the disciplinary committee that that would have to “be placed before the disciplinary committee for further action”. Since the demotion of the respondent for all intends and purposes represented a disciplinary action on the part of the appellants there ought to be evidence on record that the procedure set out in section 54(E) of exhibit A was followed. Paragraph (e) of section 54(E) is the relevant portion of the rules set up by section 54(E) to look at. As a reminder it reads:

“The report of an enquiry, agency or another person shall be declared null and void if the officer was denied a hearing and was not given the opportunity to defend himself unless the officer being investigated, refuses, declines, absconds or shows unwillingness to appear before the committee, agency or sole person appointed to investigate”.

In the instant appeal the disciplinary authority did not formally charge the respondent with any office neither was the respondent given a hearing or afforded any opportunity to defend himself. In the circumstances, therefore, I cannot agree more with the learned trial judge that in line with paragraph (e) of section 54(E) quoted above, the demotion of the respondent from the rank of Commercial Manager to Area Commercial Officer was wrongful. Therefore the appeal in that regard fails and it is accordingly dismissed. The other aspect of the appeal has to do with the High Court’s conclusion that the termination was wrongful. As I have commented above termination of an employee under section 54(E) could either be as a result of a disciplinary action or as a result of decision by the company to dispense with the services of an employee under section 63 of Senior Staff Conditions of Service, exhibit A. According to section 63,

“The employment of an officer may be terminated by the company at two months notice or by the payment of two months salary in lieu of notice”.

It means under section 63 provided the employer gives two months notice before the termination or pays two months salary to the employee in lieu of notice, termination of the employee would not be wrongful. In the instant case, just as the case of the respondent’s demotion, there is no evidence that the appellants instituted any disciplinary proceedings in accordance with section 54(E) in the course of which the respondent was charged and given the opportunity to defend himself. It might be implied, therefore, that the appellants’ termination of the respondent’s appointment was not as a result of any disciplinary action under section 54(E). The conclusion of the letter of termination would make things clear. It reads:

“In accordance with section 63 therefore of the Senior Staff Conditions of Service, your appointment with the company is terminated. The Accounts Manager is hereby advised to pay you 2 months salary in lieu of notice and to pay you all entitlements due you in accordance with the Senior Staff Conditions of Service. Any indebtedness owed the company will similarly be deducted from your entitlements”.

However the problem we have with the termination letter, exhibit C quoted above is that it assigns reasons for the termination of the respondent’s appointment. To the respondent that represented his condemnation without being charged formally and given an opportunity to defend himself which makes his termination wrongful.

In the case of Consolidated African Selection Trust v. Nketia reported in [1971] G.L.R. 363, this court, in its judgment read by Apaloo, J.A. (as he then was) commented on the right of the employer, the appellant in this appeal, to disclose or withhold reasons for the termination of the appointment of an employee at pages 369 and 370 of the report a follows:

“The rights and obligations of the parties on this issue have been exhaustibly set out in paragraph (4) (a) of exhibit D as amended. I have already read that paragraph and I will not re-read it. Under that clause, the company was clearly entitled to terminate the respondent’s employment but before doing so, it must give him three months’ notice of this. It has not done so but paid him three months’ salary, which is equivalent to the same thing. I cannot see what other obligation it owed the respondent. The respondent seemed to have thought that the company was under a contractual obligation not to exercise its right of termination without disclosing to him its reasons for so doing. That belief grounded the averment in paragraph (4) of the statement of claim. I can see no basis for this belief. It would have been in consonance with ordinary business etiquette if the company had been forthcoming with the respondent and had informed him of its reason for thinking that his services be dispensed with. It is, of course possible that sound reasons of company policy convinced the former to withhold its reasons. This is a matter in which infinite speculation is possible.”

Another instance that has a more direct bearing on the issues that confront us in this appeal is another judgment of this court in the case ofTexaco Africa Ltd. v. Bedu reported in [1978] 1 G.L.R. 307, in which Apaloo, J.A. (as he then was) had this to say at pages 313 and 314 of the report:

“At all events, as in giving the plaintiff one month’s notice of termination the company conformed with clause (2) of the agreement, we asked counsel what the wrongfulness of the company’s action consisted of. His answer was that because it had given a reason for the termination, which was contestable. When we further asked counsel if instead of giving a reason for the termination, it merely gave notice without assigning any reasons, he would still complain of unlawful termination, he said he could not. This contention was not at all attractive and counsel could not even make it so... In this case, the company, though not contractually obliged to do so, did the plaintiff the courtesy of giving him why it thought its business association with him should come to an end. That reason makes sense even to those uninitiated in the intricacies of business. We reject the contention that the agreement entitles the plaintiff to contest the validity of that reason from a business standpoint.”

In other words so long as the employer satisfies the contractual condition under section 63 of exhibit A of giving sufficient notice to terminate to the employee or makes the appropriate payment to the employee in lieu of notice, he would not be required to prove the validity of any reason that he may assign for the termination. I am therefore of the view that the termination of the respondent’s appointment by the appellants was not wrongful and not in breach of section 54(E) of exhibit A. Accordingly the appeal respecting the alleged wrongful termination of the respondent’s employment succeeds and the judgment and orders of the High Court in that regard are set aside. Since the appeal with regard to the wrongful demotion of the respondent from the rank of Commercial Manager to the position of Area Commercial Officer fails, I agree with the learned trial judge that the respondent should be paid the difference between what he should have earned as salary and allowances as Commercial Manager and what he received as Area Commercial Officer from the date of his demotion from the grade of Commercial Manager to the date of his termination as Area Commercial Officer. The payment to the respondent should attract interest at the prevailing bank rate on the date judgment of the court below and from that date to the date of payment.

SGD

ARYEETEY J.A. (PRESIDING)

JUSTICE OF THE HIGH COURT

SGD

TWENEBOAH-KODUAH J.A.

JUSTICE OF THE HIGH COURT

SGD

QUAYE J.A

JUSTICE OF THE HIGH COURT

COUNSEL

MR. THADDEUS SORY FOR DEFENDANTS/APPELLANTS

MR. PHILIP ADDISON WITH MR. KWAKU ASIRIFI FOR PLAINTIFF/ RESPONDENT