NYARKO AND ANOTHER V. BANK OF GHANA

HAYFRON-BENJAMIN J.

The plaintiffs by their writ of summons claim:

(a) a declaration that the plaintiffs’ forced and involuntary resignations on 30 June 1967 were secured by the defendants in circumstances amounting to wrongful dismissal;(b) reinstatement of the plaintiffs or in the alternative ¢100,000 (¢50,000 each) damages for wrongful dismissal of the plaintiffs by the defendants.

The plaintiffs filed a statement of claim in which they set out the grounds for their claims. Briefly their case is that the first plaintiff was until 30 June 1967 a senior clerk employed by the Bank of Ghana having risen from a clerical officer in 1959. He was on a salary of ¢1,400.00 per annum. The second plaintiff who was on a salary of ¢1,960.00 per annum was a confirmed grade II officer. Between August and September 1967, the first and second plaintiffs and others were arrested on complaints of stealing made against them by the defendants. They were arraigned before a circuit court but on 15 December 1967, they were discharged and made prosecution witnesses. While the case was pending in court, the defendants through the Governor of the Bank demanded and forced the resignation of the plaintiffs in circumstances amounting to wrongful dismissal. The first plaintiff was then 31 years of age and had served the bank for eight years. The second plaintiff was 28 years of age and had served the bank for two years. They claim that banking is a specialised career. They state in paragraph (8) of their statement of claim that:

“wherefore the first and second plaintiffs each claims ¢50,000 damages for wrongful dismissal made up as follows:(i) Special damages:(a) ¢320.04 being three months’ salary in lieu of notice at ¢106.68 per month.(b) ¢120.00 bonus payable on 30 June 1967.(ii) general damages— ¢49,559.96.”

Order 20, r. 4 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), provides that whenever a statement of claim is delivered the plaintiff may alter, modify or extend his claim without any amendment of the endorsement of the writ. Cargill v. Bower (1876) 4 Ch.D. 78 is authority for the proposition that where the plaintiff in his statement of claim drops any cause of action mentioned or any relief claimed on the writ, he will be deemed to have elected to abandon it. This was followed by Swinfen Eady J. in Lewis and Lewis v. Durnford (1907) 24 T.L.R. 64. The plaintiffs here make no mention of their claim for a declaration that they were wrongfully dismissed, and also of their claim for reinstatement. These reliefs are therefore deemed abandoned and nothing further need be said about them. We are left with the claim for damages for wrongful dismissal.

The defendants entered appearance but did not file any defence to the action and on 13 June 1971 I entered interlocutory judgment in favour of the plaintiffs and directed the registrar to fix a date for the assessment of damages. Before the registrar came round to fix a date the defendants filed a motion under Order 27, r. 4 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), praying for an order directing that damages be assessed in accordance with the terms of the contract of service between the plaintiffs and the defendants and that final judgment for liquidated damages be entered in favour of the plaintiffs. This extraordinary motion came up for hearing on 22 October 1971 and counsel for the defendant bank stated that all that the plaintiffs were entitled to was ¢109.47 and ¢451.35 respectively and that they submit to judgment for those amounts. I entered judgment for the sums in favour of the plaintiffs and directed that the case in respect of the balance of the plaintiffs’ claim should proceed. Counsel for the defendant bank then proceeded to restate the grounds appearing in the affidavit in support of his application. He placed considerable reliance on Dunlop Pneumatic Tyre Co., Ltd. v. New Garage and Motor Co., Ltd. [1915] A.C. 79, H.L. and para. 224 of Mayne and McGregor on Damages (12th ed.). I shall consider these references later.

In the meantime I shall consider one matter of procedure. The rules of pleadings have been formulated for a purpose and one important rule is found in Order 19, r. 15 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), which prescribes that a defendant must raise by his pleadings all matters which show the action or counterclaim not to be maintainable. The question that arises here is whether a defendant who has made default in delivering a statement of defence to a claim for unliquidated damages, can resist the assessment of the damage on the ground that there was a previous agreement not to pay damages or to pay a liquidated sum. It seems to me that where there is default in delivering a defence and an interlocutory judgment is entered that judgment establishes the defendant’s liability to pay unliquidated damages, and that is why the rules direct damages to be assessed. Liquidated sums are not assessed; they are known and fixed. I am of the view that once interlocutory judgment is entered, a defendant is deemed to have waived and is precluded from relying on any previous agreement to pay a liquidated sum. The question of damages is open and at large, and ought to be assessed as in all cases for unliquidated damages. This must be so because historically the assessment of damages was within the province of the jury, and one of the fundamental rules was that the amount of damages claimed in any action was not to be mentioned to the jury or that money has been paid into court or its amount.

The general rule for the assessment of damages in wrongful dismissal cases at common law is that an employee dismissed in breach of contract can recover nothing more than damages equal to what he would have earned in the proper period of notice, whatever the circumstances: see Addis v. Gramophone Co., Ltd. [1909] A.C. 488, H.L. The courts of equity generally refused to order specific performance of any contract for personal services, and there could therefore be no claim for reinstatement. One consequence of this attitude of the courts was that the termination of the contract by the employer was always effective even though wrongful: see Denmark Productions Ltd. v. Boscobel Productions Ltd. [1968] 3 W.L.R. 841, C.A. Damages were therefore assessed as from the date of actual termination of the contract and the employee was given what he would have earned in the proper period of notice. It seems that these principles and rules are still applicable to relations between employees and employers in the private sector of the economy.

The question for consideration is whether these rules are applicable where the plaintiff’s contract is controlled by a statute or statutory regulations. This question is of some importance in view of the wide area in our economy occupied by statutory corporations. The Bank of Ghana, the defendants, are a statutory corporation completely owned and controlled by the State. It is a State Bank par excellence. The bank is governed by the Bank of Ghana Act, 1963 (Act 182), as amended. The appointment of employees is governed by section 11 which provides that:

“(1) Save as may otherwise be provided by bye-laws made by the Bank, all appointments of employees shall be made on behalf of the Bank by the Governor.(2) Employees of the Bank shall be engaged on such terms and conditions as shall be laid down by the Board.(3) No salary, fee, wage, or other remuneration or allowance, paid by the Bank shall be computed by reference to the net or other profits of the Bank.”

Section 52 provides that:

“The Board may, with the prior approval of the Minister, make bye-laws or other instruments, not inconsistent with the provisions of this Act for the purpose of regulating its constitution and other objects falling within the scope of its functions.”

These bye-laws have been made and it is clear from the above-quoted sections of the Act that the appointment and terms of engagement of officers and employees of the bank are subject ultimately to statutory control. It is not necessary at this stage to examine these bye-laws; the defendants by not filing a statement of defence and submitting to judgment for a portion of the damages claimed, are deemed to admit that there was wrongful dismissal. It may very well be that if the issue of liability had been fought on its merits, no finding of wrongful dismissal would have been made, but the court cannot overrule the principles of pleading. The defendants have admitted wrongfully dismissing the plaintiffs and the question that has to be determined is whether a wrongful dismissal of a person in what may be termed public employment is ineffective or a nullity giving rise to a right to is be reinstated or paid compensation. I do not here include civil servants or members of the Armed Forces who are subject to their own statutes and may be dismissed at pleasure even though I personally doubt whether in a Republican State like ours, any citizen’s employment can be said to be at the pleasure of any other person including the State. Lord Reid inRidge v. Baldwin [1964] 2 All E.R. 66 at p. 71, H.L. has stated the three cases of dismissal. He said:

“So I shall deal first with cases of dismissal. These appear to fall into three classes, dismissal of a servant by his master, dismissal from an office held during pleasure, and dismissal from an office where there must be something against a man to warrant his dismissal.”

The learned and noble Lord then went on to deal with the law regarding master and servant and there seemed to place dismissal from statutory bodies in the category of master and servant. He said at the same page that:

“The law regarding master and servant is not in doubt. There cannot be specific performance of a contract of service and the master can terminate the contract with his servant at any time and for any reason or for none. But if he does so in a manner not warranted by the contract he must pay damages for breach of contract. So the question in a pure case of master and servant does not at all depend on whether the master has heard the servant in his own defence: it depends on whether the facts emerging at the trial prove breach of contract. But this kind of case can resemble dismissal from an office where the body employing the man is under some statutory or other restriction as to the kind of contract which it can make with its servants, or the grounds on which it can dismiss them.”

I do not think however that the learned and noble law Lord meant to place employment by statutory corporations on the same footing as private employment. In examining the distinction between the two types of employment, I shall take as my starting point the statement of Fry L.J. in De Francesco v. Barnum (1890) 45 Ch.D. 430 at p. 438. He said:

“For my own part, I should be very unwilling to extend decisions the effect of which is to compel persons who are not desirous of maintaining continuous personal relations with one another to continue those personal relations. I have a strong impression and a strong feeling that it is not in the interest of mankind that the rule of specific performance should be extended to such cases. I think the Courts are bound to be jealous lest they should turn contracts of service into contracts of slavery; and therefore, speaking for myself, I should lean against the extension of the doctrine of specific performance and injunction in such a manner.”

It is clear that the element of personal relationship is absent in employment in nationalised industry. The reasons given by Fry L.J. are largely irrelevant to contracts of employment by statutory corporations. It may be that the courts are not likely to decree specific performance against a servant who is unwilling to work but I do not see any slavery involved in all order compelling a person to fulfil his undertaking to work for a state organization in accordance with the terms of his contract. Conversely, I do not think there is any reason to suppose that there is such a personal relation between the Governor of the Bank of Ghana and an employee of the bank such as the plaintiffs which would render it oppressive to compel the bank to fulfil a contract of employment with an employee.

Even in private employment the tendency has been in favour of more protection for the worker. The famous I.L.O. Recommendation No.119 on the termination of employment at the initiative of the employer states that:

“Termination of employment should not take place unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service.”

It is true that this recommendation has not yet been incorporated in the general law relating to private employment, but the tendency is clear. There was a time when there was nothing wrong or illegal with a private employer engaging only members of a particular race or colour and excluding others. Now the law frowns on such practices. An employer may not restrict engagement only to members of a particular tribe. Nothing even now prevents a private employer from engaging only members of his family to keep his shop, or only men to work on his farm. The elimination by the law of nepotism and sex discrimination in private employment is not complete as yet. In the case of public employment by the State or state instrumentalities or statutory corporations, I am of the view that the I.L.O. Recommendation No. 119 represents the general law. I do not see how dismissal from a statutory corporation for reason unrelated to the capacity or conduct of the worker or not based on the operational requirements of the undertaking can be otherwise than wrongful. A dismissal of an employee from public employment on the ground that the management disapproves of his politics, or his religion, or tribe, or his sex, or his race or colour must always be invalid. It is invalid in the sense that it ought not to be done. It is an act which is a nullity in that it is against the statutory provisions regulating the terms and conditions of employment by the statutory corporation. Unlike wrongful dismissal in the field of private employment where the dismissal takes effect even though it is wrongful, in the field of public engagement it does not take effect at all. To allow an act which contravenes statutory provisions to take effect is to amend the statute. The provisions laid down concerning the terms and conditions of service of employees of a statutory corporation are exhaustive, and any act infringing them is a nullity. See Vine v. National Dock Labour Board [1957] A.C. 488, H.L. and Palmer v. Inverness Hospital Board (1963) S.L.T. 126.

It is suggested that these principles apply only to employees whose terms of employment are governed directly by statute, and that employees of statutory corporations are in the same position as employees of limited liability companies. I do not agree. The Companies Code is the statute governing limited liability companies. It does not create them; they come into existence by the acts of private individuals or other companies, which acts must conform to the provisions of the Code.

Certain relations between the shareholders inter se, and their directors and other officers or employees arise by agreement. The promoters decide what regulations to adopt or stipulate. A statutory corporation is entirely the creature of statute. It does not come into being by any act of any party. All its acts must be governed by the statute creating it. The terms and conditions of employment must be valid according to the statute or regulations or bye-laws made under that statute. A wrongful act of dismissal must therefore be contrary to the said regulation and bye-laws and therefore null and void. I would have thought that where the act or notice of dismissal is null and void, it does not take effect, and the employee thus wrongly treated is entitled to be reinstated or to be paid reasonable compensation in lieu thereof. Every duly qualified citizen is entitled, if he applies and subject to there being a vacancy, to be considered for employment in a statutory corporation on the same basis as any other duly qualified citizen who also applies. If therefore an employee is found to have been wrongfully dismissed, the court can order him to be reinstated provided his place has not already been filled, or reasonable compensation paid in lieu thereof. The employee I would have thought would have a remedy by way of a declaration that his employment has not been validly terminated. In the case of McClelland v. Northern Ireland General Health Services Board [1957] 1 W.L.R. 594, H.L. a clerk’s terms and conditions of service provided for dismissal for gross misconduct or if he proved “inefficient and unfit to merit continued employment.” There were other grounds for which the clerk could be dismissed but none for redundancy. A majority of the House of Lords held that the clerk could not be dismissed on the ground of redundancy of staff. Apaloo J.A. (as he then was) said inConsolidated African Selection Trust Ltd. v. Nketia [1971] 1 G.L.R. 363 at p. 370, C.A. that this case decided no novel point of principle, and in so far as it involved any application of principle, “it is the age-old one that the courts must respect the sanctity of agreements.” One thing is however clear, and it is that none of the law Lords questioned the right of the plaintiff to proceed by way of a declaration that her employment had not been validly terminated. By making the declaration the House of Lords meant that she was and always had been employed by the Board.

A learned writer G. de N. Clark in 32 M.L.R., p. 539 tells us that “she duly resumed her duties and continues to perform them to this day.” The case of Atoongo v. Bolgatanga Urban Council, Court of Appeal, 23 February 1970, unreported; digested in (1970) C.C. 39 however goes the other way. The appellant in that case was employed as registrar by the Bolgatanga Local Council, the predecessors-in-title of the respondents. As a result of his involvement in a criminal case, he was interdicted and placed on half pay. He was finally acquitted but the Finance and Staff Committee of the respondent council wrote terminating his appointment. He sued for:

(a) arrears of salary;

(b) a declaration that the decision of the respondents dismissing him was ultra vires and unlawful; and

(c) a declaration that the defendants should not be entitled to treat the plaintiff as having been heretofore dismissed from their services.

The court following the opinion of the Privy Council in Francis v. Municipal Councillors of Kuala Lumpur [1962] 3 All E.R. 633, P.C. held that the proper remedy was by way of damages.

In the case before me the plaintiffs have in fact sued for damages, and it is therefore not necessary to examine in detail the present state of the law as to what remedies are available beyond adding to what has already been said the observation that in the celebrated case of Sallah v. Attorney-General, Supreme Court, 20 April 1970, unreported; digested in (1970) C.C. 35 the plaintiff’s claim was in effect for a declaration that he had not been validly dismissed. Sallah was not in any status position as the respondent in Vine v. National Dock Labour Board [1957] A.C. 488, H.L. which was distinguished inAtoongo’s case.

The question for consideration is the quantum of damages. Atoongo’s case is no guide as to the damages to be awarded in cases where the purported dismissal is null and void and not merely wrongful. In Francis v. Municipal Councillors of Kuala Lumpur [1962] 3 All E.R. 633, P.C. their Lordships relieved themselves of the obiter to the effect that the appellants’ employment must be treated as having in fact come to an end on 1 October 1957 and the appellants’ remedy lay in a claim for damages. Their Lordships therefore treated what they had held to be null and void as having operated to determine the contract. They said at p. 637

“Their Lordships’ consider that it is beyond doubt that on Oct. 1, 1957, there was de facto a dismissal of the appellant by his employers, the respondents.”

It seems their Lordships came to this conclusion because as they themselves said at p. 637

“It would be wholly unreal to accede to the contention that since Oct. 1, 1957, he had continued to be and that he still continues to be in the employment of the respondents.”

It is true that anything falling from the lips of the noble and learned Lords of Her Majesty’s Privy Council is entitled to the greatest respect; I must however confess that I do not find my way clear to accept their reasoning. The case of Ridge v. Baldwin [1963] 2 All E.R. 66, H.L. is not of much help in that the plaintiff did not seek reinstatement and the law Lords thought that it would not be appropriate to deal with that question. Lord Morris for example said at p. 106 that:

“The appellant, through his counsel, has stated that he has no intention of applying for reinstatement, but would be content to retire (as from March, 1958), with his pension. I apprehend that in all the circumstances it would not be appropriate for your Lordships to do more than to declare that the purported termination on Mar. 7, 1958, of the appellant’s appointment was void. Included in the other claims of the appellant in his action is a claim for his salary as from Mar. 7, 1958. It would not seem appropriate at the present stage to deal with the appellant’s claim for salary, and it would not be for your Lordships to decide any question as to a pension.”

I am of the view that where the dismissal is a nullity no dismissal has in fact taken place, and that the sum to which such an employee is entitled ought not to be assessed in the same way as where a dismissal of a servant in private employment is held to be merely wrongful. In the latter case the dismissal operates in law and not merely de facto to terminate the contract of employment. In the former case no legal consequences can flow from an act which is null and void. I am of the view that the employee in such a case is entitled to a sum equal to what he would have earned up to the date of judgment and to the stipulated contractual sum payable in lieu of the period of notice which the employee would have been entitled to if the termination had been proper. The court would as such be recognising the fact that the act of dismissal was null and void and that the plaintiff had never been dismissed, but that the law from historical and other reasons of public policy does not encourage or permit reinstatement of workers. The judgment would therefore operate to terminate the contract of employment from the date of delivery. The employee would normally get a sum equal to what he would have earned if he had remained in employment plus the sum in lieu of the stipulated period of notice for proper termination, less any sum earned in other employment pending the hearing and determination of the case. This is so because if he had been in the defendant’s full time employment he would not have been allowed to take up other employment and must be made to bring into account any remuneration he had received from other employment. I do not think it is necessary to consider whether the common law duty to mitigate one’s damages is applicable to public employment. It is when the court comes to consider what sum to pay in lieu of the requisite period of notice, that cases like Dunlop Pneumatic Tyre Co. v. New Garage and Motor Co., Ltd. [1915] A.C. 79, H.L. become relevant. But as I have already said, the defendants by not filing a defence and allowing an interlocutory judgment to be entered against them have waived their rights to rely on that agreement. I nevertheless consider that the period of three months’ notice in the case of the first plaintiff and one month’s notice in the case of the second plaintiff are reasonable. I have already entered judgment in the sum of ¢109.47 in favour of the first plaintiff being a month’s salary in lieu of notice and ¢451.35 in favour of the second plaintiff being three months’ salary in lieu of notice. There is no evidence before the court that the plaintiffs have been in other paid employment since 30 June 1967. 1 now enter judgment for the first plaintiff in the sum of ¢7,881.84 being the amount he would have received less tax and other deductions if he had remained in employment. I also enter judgment in favour of the second plaintiff in the sum of ¢10,832.40. The defendant will pay the costs of both plaintiffs which I assess in favour of each plaintiff in the sum of ¢750 making a total of ¢1,500.00.

COUNSEL

M. K. AYISI FOR THE PLAINTIFFS

C. QUIST FOR THE DEFENDANTS.