S.C.O.A. MOTORS, ACCRA V. KORANTENG

AZU CRABBE J.A.

This is an appeal against the judgment of Acolatse J. whereby £G30 damages together with 150 guineas costs were awarded in favour of the plaintiff against the defendant company in an action for wrongful dismissal. The following statement of the facts of the case is taken from the judgment of the trial court:

“The plaintiff is a comparatively young man of 34 years who has been unemployed since 31 May 1961 upon his dismissal from the service of the defendant company.

The plaintiff was originally employed in the service of the company in 1949 at Nsawam as a debit clerk. He was transferred to Accra in the same position as a debit clerk by the company in 1958 until his dismissal at a salary of £G30 a month. The plaintiff’s duty at the time of his service with the company was to prepare debit notes and invoices and extensions for the defendant’s tyre stores at Kumasi, Takoradi and Accra. It appeared that the plaintiff discharged his duties diligently and had the confidence of his superior officers. However, in November 1960 a shortage was detected in the tyre store in Accra kept by the company’s storekeeper, I. K. Kwetey. There had been discovered in the plaintiff’s books certain errors and the manager, Mr. Platnic, questioned the plaintiff about those errors in the invoices and debit notes concerning the Accra tyre store kept by Kwetey. The plaintiff was suspected of having conspired with the storekeeper to defraud the company by deliberately causing alterations in the cost price and the selling price on the invoices and yet leaving the grand totals intact. The plaintiff denied the allegation of conspiracy with the storekeeper to steal the amount alleged in the shortages against the storekeeper. The plaintiff, however, insisted that the errors in the books were genuine and not deliberately done in concert with the storekeeper in connection with the shortages in the Accra store and that he corrected the debit notes putting in the correct figures upon Mr. Platnic’s instruction to do so. The defendant company reported the matter of the shortages against the storekeeper to the police. The police on 31 January 1961 searched the plaintiff’s premises and found six sheets of paper containing names of the storekeeper’s credit customers. The first five sheets were written by the storekeeper. The sixth was written by the plaintiff who alleged he wrote the names down on instruction of the storekeeper for the storekeeper’s own use to balance his account for the storekeeper. It had nothing to do with his duties at all. It was not prepared for the company but for the use of the storekeeper when he took his own stock. He, the plaintiff, had nothing to do with the stocktaking of the defendant’s tyre store. The photostat of the original sheet on which the plaintiff wrote the names of the credit customers was put in evidence as exhibit 1 by the defendants. They found a total shortage when they balanced the stock for the storekeeper on the list in the sum of £G3,204 4s. 10d. but they did not know the nature of the shortages. Exhibits 2 and 3 called the “pneumatic books” were put in, which were books kept by the plaintiff in which he made the entries. The corrected figures were done by adding machine when the books were collected from the plaintiff by the manager. The plaintiff had never had the opportunity to check his entries by the use of an adding machine. It was never used in the course of his duties and employment. He denied having made the alterations after the accounts had been checked and signed. The plaintiff during the investigation into the shortages was transferred to the post of a supervisor of the accounts section of the spare parts department in February 1961 at the same salary as his former position. It was admitted that the post of a supervisor is more important than a debit clerk. He was checking entries made by other clerks in the department under the immediate supervision of Mr. Platnic, the manager. The plaintiff was formally dismissed by the company under a letter dated 31 May 1961 tendered as exhibit A without notice as from the receipt of the letter: ‘You will recall that at the end of January 1961 we found shortages in the tyres and tubes department. During our investigation into this matter we discovered serious discrepancies in the 336 account amounting to £G2,230 (two thousand two hundred and thirty pounds). On drawing your attention to this you admitted to having changed figures in the 336 account after the account had already been checked and signed as correct. It seemed a strange coincidence that from all the garages whose accounts you control the discrepancies were only discovered in the Accra account. The police investigations into this incident entailed a search of your living quarters where a list of customers who have received credit from the tyre storekeeper was discovered in your possession. From this list the company was able to recuperate some small amount from the existing shortage. The company has decided after due consideration that your conduct warrants instant dismissal without notice. We are therefore dispensing with your services as from the receipt of this letter.’

The defendants’ manager gave evidence for the company. The evidence was not very much at variance with the evidence given by the plaintiff. The witness said having found certain discrepancies in the account of the storekeeper he reported the matter to the police who took up the investigation and found exhibit 1 on the premises of the plaintiff. The witness found the invoices had been wrongly extended and corrected and also on the grand total. In some cases although there had been corrections in the invoices and on the books the grand total was not changed. The witness said it was not correct for the plaintiff to deny that he made the alterations after checking had been done. The defendants admitted that they were satisfied with the work of the plaintiff before this incident when the alterations were discovered in his books as a debiting clerk. The plaintiff after his dismissal was charged by the police in December, 1961 and was later prosecuted in the Criminal Session, Accra, and acquitted and discharged on a charge of conspiracy with the storekeeper in December, 1962. The charge was based upon the exhibits in this court dealing with the shortages in the tyre store. The interesting part of the testimony of Mr. Platnic was that the plaintiff was a hard working employee and that he was an honest person up to the time he discovered the mistakes in his books. He went on to say he found no fault with the plaintiff when he posted him to the accounts branch. At that time he said he had not lost confidence in the plaintiff. The plaintiff was not employed under a written agreement. It was an oral contract of service. The procedure in the service of the company is one month’s notice in the opinion of Mr. Platnic. The defendants however denied that the dismissal of the plaintiff from the service was wrongful and they were justified in dismissing him on the ground that he was guilty of misconduct in the performance of his duties as particularised under paragraph (8) (a), (b) and (c) of the statement of defence.”

The particulars referred to above were:

“(a) that the plaintiff deliberately changed figures in a number of the defendant company’s books and invoices without changing the total amount with which their tyre storekeeper was debited;

(b) that the plaintiff presented false accounts in respect of the tyre store of the defendant company; and

(c) that the plaintiff failed to report shortages discovered to the defendant company.”

The defendant company further averred, in the alternative, that they found the plaintiff not reasonably competent to perform the services for which he was employed.

Without attempting to examine the validity of any of the alleged grounds upon which the plaintiff was dismissed the learned trial judge took the view that the defendant company disabled themselves from exercising their right of dismissal by the continued employment of the plaintiff in their service, and, a fortiori, by assigning the plaintiff to a duty more important than that which he had previously performed. In coming to this conclusion the learned trial judge relied on a passage from Halsbury’s Laws of England (3rd ed.), Vol. 25, at p. 488, para. 940 and on Phillips v. Foxall (1872) L.R. 7 Q.B. 666 in which the following principle is stated at p. 680 by Blackburn J.:

“Now the law gives the master the right to terminate the employment of a servant on his discovering that the servant is guilty of fraud. He is not bound to dismiss him, and if he elects, after knowledge of the fraud, to continue him in his service, he cannot at any subsequent time dismiss him on account of that which he has waived or condoned.”

The learned trial judge also held that there was no duty on the plaintiff to report the misconduct of his fellow employees to the defendant company. Consequently, he found “as a fact” that the plaintiff was wrongfully dismissed without notice under exhibit A on 31 May 1961 and that he had indeed suffered pecuniary damage as a result of the dismissal and he was therefore entitled to damages for the wrongful dismissal.

Against the decision of the learned trial judge this appeal was launched on the following grounds:

“(1) the learned judge was wrong in finding as a fact that the plaintiff was not guilty of misconduct.

(2) The learned judge was wrong in holding that even if the plaintiff was guilty of misconduct such misconduct was condoned by the defendant.

(3) In awarding costs the learned judge did not exercise his discretion judicially.”

In arguing ground (1) counsel for the defendant company submitted that the learned trial judge failed to consider the misconduct alleged and proved by the defendant company, and consequently he did not consider whether the acts of the plaintiff amounted to misconduct which would justify his dismissal. The plaintiff’s duty was to work out the extension of selling prices over the cost price, and then make out the grand total of the selling price on the invoice; he then entered the grand total of the cost price in one column and the selling price in the next column in the local pneumatic books (exhibits 2 and 3) from the invoices. He would then add up the grand totals of the cost price and the selling price from various stations of the defendant company. Counsel pointed out in exhibits 2 and 3 alterations which the plaintiff had made in the figures in the grand totals of the selling price on all the invoices. Some of the alterations however show the correct figures, but a few show wrong figures on the grand total of the invoices. It is also clear from an examination of exhibit 3, and this is the main complaint of the defendant company, that entries of the grand total from the invoices in exhibit 3 had also been correctly entered but the plaintiff omitted to make corresponding corrections of the grand totals on exhibit 3 on all the pages. Where the corrections were wrong they related to the Accra store, and the defendant company contended that the corrections were made after the various pages had been checked and signed as correct. The defendant company further contended that these alterations were not genuinely made by the plaintiff, but were deliberately made to cover up frauds by the tyre storekeeper, one Mr. Kwetey. The defendant company’s case was tersely stated by Mr. Platnic, the manager of the defendant company’s spare parts department as follows: “I found the invoices had been wrongly extended and corrected and also in the grand total. In some cases although there had been corrections on the invoices and on the books the grand total was not changed.” The witness then gave evidence of details of falsifications by the plaintiff, and the plaintiff’s admission to him of alterations in the books of the defendant company. On the whole I am satisfied that there is overwhelming evidence that the plaintiff falsified the books of the defendant company and that this resulted in a loss of nearly £G3,204 4s. 10d. to the defendant company.

In my judgment where there is some evidence of misconduct it is the duty of the trial judge to direct his mind to the nature of the acts proved and to consider whether such conduct is inconsistent with the due and faithful discharge of the duties of service. This is essentially a question of fact and degree for him to determine: see Clouston and Co., Ltd. v. Corry [1906] A.C. 122, P.C. and Baster v. London and Country Printing Works [1899] 1 Q.B. 901. There plaintiff’s conduct in falsifying the books of the defendant company was highly reprehensible and amounts, in my view, to dishonesty, which is always a ground for summary dismissal. As Lord Atkinson pointed out in Federal Supply and Cold Storage Co. of South Africa v. Angehrn and Piel (1910) 103 L.T. 150 at p. 151 P.C., “It is the revelation of character which justifies dismissal.” Even one isolated act of dishonesty is enough.

In this case even if the plaintiff was not dishonest, he was obviously incompetent. The position is that a servant is deemed to possess the skill which he professes to have by entering into the engagement or contract of service, and he is liable to dismissal, if he fails in that skill. By accepting employment with the defendant company the plaintiff made them the judges of his competence, and if they were genuinely dissatisfied with him they could dismiss him summarily: see Diggle v. Ogston Motor Co. (1915) 112 L.T. 1029. In exhibit A the defendant company expressed their dissatisfaction with the plaintiff.

Mr. Agadzi, counsel for the respondent, quite properly conceded that on the face of the record there was misconduct on the part of the plaintiff which could have justified his summary dismissal. He contended, however, that there was condonation. I shall deal with this contention later in this judgment.

In view of the clear and overwhelming evidence of dishonesty, or incompetence, or both, against the plaintiff, I think with the greatest respect, that the learned trial judge was wrong in finding “as a fact” that the plaintiff was wrongfully dismissed without notice.

The only allegation of misconduct which the learned judge considered was the one which alleged that the plaintiff failed to report shortages discovered to the defendant company. The evidence in support of this allegation was that when the manager of the defendant company discovered the false entries in the plaintiff’s books he suspected the plaintiff of conspiring with the storekeeper whose accounts were affected by the entries. Exhibit 1 which was found in the room of the plaintiff showed that the plaintiff had discovered in the course of his duty a total shortage of the sum of £G3,204 4s. 10d. in the accounts of the storekeeper, but the plaintiff had failed to disclose this fact to the defendant company. Now, the question whether a servant is under a duty to inform his master of the misconduct of his fellow servants is not always easy to determine. It is in many cases determined by considering : (1) the terms of the service agreement, (2) the position held by the servant in the service of the master, and (3) the nature of the duties performed by the servant.

In this case it was the plaintiff’s duty to prepare debit notes and extensions for the stores in Accra, and his misconduct in this regard not only consisted in showing indifference to the fraud being perpetrated on the defendant company, but also in actively concealing the fraud to the detriment of the defendant company. It is the duty of a servant to render honest and faithful service to his master, and this implies the right to protect the master’s interest. I should have thought that the nature of the service which the plaintiff performed imposed upon him a duty to inform the defendant company about those who were defrauding the company.

In arguing the second ground of appeal, counsel for the appellants submitted that there was no evidence of condonation, and referred to that part of the evidence of the plaintiff where he said:

“I was promoted to the post of a supervisor of the accounts section of the spare parts department in February 1961 by Mr. Platnic verbally on my former salary. I was no longer dealing with making entries at my new post. I was checking entries made by other clerks in the spare parts department. I was asked to take over as soon as the former supervisor left. I was doing the checking under the immediate supervision of Mr. Platnic.”

He submitted further that this evidence does not amount to condonation. Perhaps the clearest evidence, in my view, negating any notion of condonation is that given by Mr. Platnic. He testified as follows:

“The plaintiff’s change over as supervisor of accounts section was in February, 1961. I was then investigating the shortages in our tyres shop. I found discrepancies in the entries referring to Accra tyres store made by the plaintiff in the invoices and books. At that time we did not want to take any action against the plaintiff before the investigation would be completed. I did not want the plaintiff to continue his work as debiting clerk and so I put him on the job of checking entries made by others. It was not a promotion. I was checking over what he was doing.”

He further said:

“The plaintiff was working directly under me when he was transferred to the accounts branch. It was not a promotion. It was to avoid the plaintiff dealing with preparation of debit notes. He did not have to prepare debit notes in the accounts branch but to check them. There was no question of increase in his salary.”

In an action for wrongful dismissal the onus is on the servant to prove that his master has waived his right to dismiss him, if the master alleges in his pleadings and proves facts which, but for that waiver, would justify dismissal. The onus can be discharged by the servant showing that the waiver was made with the full knowledge of all the facts.

In this case it is plain that the plaintiff ‘s change over as supervisor of accounts section was not a promotion, for he was not given increased responsibilities, neither did he receive correspondingly enhanced remuneration. His work now became subject to supervision. I think that, far from promoting the plaintiff, the defendant company moved him from his post of debiting clerk solely with the object of getting a better opportunity to inform themselves fully of the plaintiff’s misconduct. In my view the plaintiff failed to discharge the onus of proof and in those circumstances I think that the learned judge erred in holding that the defendants had condoned the plaintiff’s misconduct.

In view of the foregoing it does not appear necessary to deal with the appeal against costs, but since this ground of appeal has been strenuously argued I shall deal with it. In giving judgment for the plaintiff the learned judge awarded him 150 guineas costs inclusive, and the ground of appeal against this order of costs is that in awarding the costs the learned trial judge did not exercise his discretion judicially. Under Order 65, r. 1 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A) the costs of, and incidental to, all proceedings in the High Court are in the discretion of the court or judge. The discretion is absolute and unfettered, but it must be exercised according to reason and justice, and not according to a feeling of benevolence or sympathy. The Court of Appeal will only interfere with the order as to costs if it is satisfied that there is no legitimate or reasonable ground on which the judge or court exercised the discretion. In this connection I should like to cite with approval the words of Lord Halsbury in Civil Service Co-operative Society Ltd. v. General Steam Navigation Co. [1903] 2 K.B. 756 at p. 765, C.A.:

“No doubt, where a judge has exercised his discretion upon certain materials which are before him, it may not be, and I think is not, within the power of the Court of Appeal to overrule that exercise of discretion. But the necessary hypothesis of the existence of materials upon which the discretion can be exercised must be satisfied.

See also Donald Campbell and Co., Ltd. v. Pollak [1927] A. C. 732. per Lord Haldane at p. 752, H.L. It is therefore necessary to examine the ground upon which the learned trial judge exercised his discretion.

The plaintiff’s claim against the defendant company as per his writ of summons was for (1) £G600 general damages and (2) £G480 special damages being salary from June 1961 to September 1962 (16 months), at £G30 a month. The learned trial judge held that the plaintiff was wrongfully dismissed, and he awarded him £G30 only for the wrongful act of the defendant company. This is an award under the claim for general damages, limited to the amount which the plaintiff would have earned over the period of the notice of dismissal. The amount awarded was in the nature of nominal damages, and it is therefore not surprising that the learned judge did not make any award in respect of the claim for special damages. The award of £G30 damages means that the action should have been brought in the district court and, with all due deference to the learned trial judge, it seems to me an improper exercise of discretion to make an order as to costs for an amount which is equivalent to the limit of the district court’s jurisdiction in civil proceedings. The real object of awarding costs is to recoup a plaintiff who had successfully established his right to maintain the litigation which he had commenced or the defendant who had been wrongly dragged into court and harassed with litigation. In Clarke v. Hart (1858) 6 H.L.Cas. 633 at p. 667, Lord Cranworth made an observation on costs which I wish to quote with approval:

“I think that the general principle upon the subject of costs is, and ought to be, that which was often laid down and acted upon by Lord Cottenham, that the costs ought never to be considered as a penalty or punishment, but merely a necessary consequence of a party having created a litigation in which he has failed ...”

In my view the costs of 150 guineas in the present case is more in the nature of a punishment to the unsuccessful defendant company than a recompense to the successful plaintiff. It also seems to me that the learned judge overlooked the fact that he was entitled to order the plaintiff to pay the costs occasioned by his claim for special damages which he failed to prove: see Forster v. Farquhar [1893] 1 Q.B. 564, C.A.

For the above reasons, I would allow the appeal and set aside the judgment of the court below together with the order as to costs, and would enter judgment for the defendant company. The appellants will have their costs in this court and in the court below. The costs in the court below if paid are to be refunded.

OLLENNU J.A.

I agree.

APALOO J.A.

I also agree.

COUNSEL

DJAMSON FOR THE APPELLANTS

T. K. AGADZI FOR THE RESPONDENT.