BANK OF GHANA vs. NARKO AND ANOTHER [1973] 2 GLR 265

CASES REFERRED TO

(1) Vine v. National Dock Labour Board [1957] A.C. 488; [1957] 2 W.L.R. 106; 101 S.J. 86; [1956] 3 All E.R. 939, H.L.

(2) McClelland v. Northern Ireland General Health Services Board [1957] 1 W.L.R. 594; 101 S.J. 335;

[1957] 2 All E.R. 129, H.L.

(3) Francis v. Municipal Councillors of Kuala Lumpur [1962] 1 W.L.R. 1411; [1962] 3 All E.R. 633;

106 S.J. 833, P.C.

NATURE OF PROCEEDINGS

APPEAL against the judgment of the High Court, Accra, that the plaintiffs were wrongfully dismissed and were entitled to special and general damages over and above sums stipulated in the contract of service between the parties. The facts are fully stated in the judgment of Apaloo J.A.

COUNSEL

C. E. Quist (Wontume with him) for the appellants.

M. K. Ayisi for the respondents.

JUDGMENT OF APALOO J.A.

The Bank of Ghana (hereinafter called the bank) appeals against the judgment of Hayfron-Benjamin J. whereof the judge awarded in favour of the respondents, general and special damages for wrongful dismissal.

The respondents were until 30 June 1967 employees of the bank in different capacities. The first respondent was employed in 1959 as a clerical officer and had by June 1967 risen to the post of a senior clerk on a salary of ¢1,400 per annum. The second respondent was employed in August 1965 as an officer grade 2 on probation and by June 1967, was confirmed in his post and was in receipt of a salary at the rate of ¢1,960 per annum.

Some time between August and September 1967, the respondents were arrested and charged with stealing. The charges against them seem to have been preferred on the complaint of the bank. On 15 December 1967, the Republic entered a nolle prosequi against them and they were discharged. While the criminal matter was pending against them, the bank, acting by its Governor, requested the respondents’ resignation. They did so. Although prima facie, the respondents resigned their employments, they claimed that they were forced to do so “in circumstances amounting to wrongful dismissal.”

Accordingly, on 27 June 1970, they jointly issued against the bank a writ claiming:

“(a) a declaration that the plaintiffs’ forced and involuntary resignations on the 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.”

[p.268] of [1973] 2 GLR 265

In their statement of claim, the plaintiffs asked for just special and general damages for wrongful dismissal. The learned judge observed on this that as the plaintiffs omitted to make any mention of their claims for a declaration of wrongful dismissal and reinstatement, they must be deemed to have abandoned these reliefs. No point was made of this by the plaintiffs. The special damages sought were grounded firstly, on the fact that before dispensing with their services, they were entitled in the case of the first respondent to one calendar month’s previous notice in writing and in the case of the second respondent to three months’ notice and secondly, they were each entitled to bonuses. The claims to salaries in lieu of notices were conceded by the bank and the learned judge was not troubled with any controversy on that point. But the circumstances in which that claim was conceded were made much of by the judge in considering the substantive question whether the plaintiffs were entitled to any more than the bank conceded.

The plaintiffs delivered a statement of claim on 28 October 1970. As no defence was delivered to this by 21 June 1971, the plaintiffs moved for judgment in default of defence. The reason why the bank omitted to deliver a defence was given to the court when this motion was listed for hearing on 29 June. It was that the solicitors were in communication with a view to settlement. This was told to the court by the respondents’ counsel. On this account, he sought a fortnight’s adjournment of the motion. The court acceded to this and postponed hearing to 13 July 1971. Apparently by that date, the negotiations had not crystallised into a binding settlement. So when the matter was again before the court on 13 July, the bank’s solicitor gave as a reason for not filing a defence the fact that there was “correspondence between solicitors for the parties with a view to settlement.” This, it is to be remembered, was precisely the ground on which the respondents’ counsel declined to press with the motion for judgment a fortnight previously. Counsel for the respondents was in court. He did not dispute this. Indeed that was his own stand a fortnight before. The judge did not address any question to him on this but the court proceeded to order as follows: “Per Court: Interlocutory judgment entered in favour of the plaintiffs. Registrar to fix date for assessment of damages.” This result is a little odd and evoked the complaint from the bank in ground 2 of its grounds of appeal that “the plaintiffs obtained their interlocutory judgment by fraud as to their knowledge, the defendants’ failure to file a statement of defence was because negotiations for settlement out of court were going on between the plaintiffs and the defendants’ solicitors.”

I think this a perfectly understandable reaction but in the view that I take of this case, it is not necessary to express any opinion on the ethical merits of this complaint. The bank sought to meet the consequence of this order by an application which was unusual and which the judge described as “extraordinary.” Before the “interlocutory judgment” could

[p.269] of [1973] 2 GLR 265 be converted into a final judgment by the ascertainment of damages, the bank moved the court. professedly under Order 27. r. 4 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), for the “damages to be assessed in accordance with the terms of contracts of service between the plaintiffs and defendants and final judgment for liquidated damages be entered in favour of the plaintiffs . . .”

When this motion came before the court on 22 October 1971, the bank submitted to judgment in respect of the first respondent for the sum of N¢109.49 and in respect of the second respondent for the sum of N¢451.35 these being salaries for the periods the bank was obliged by the contract to give notice to the respondents. The bank then submitted that the respondents were entitled to no more than these and cited legal authorities to support this stand. This contention was resisted by counsel for the respondents. Counsel’s articulated position was that as the sums for which the bank submitted to judgment were not offered to the respondents, the bank could not invoke that provision in the contract because as counsel put it, the bank “themselves have not complied with that clause.”

The learned judge entered judgment for the respondents for the amounts admitted by the bank but reserved ruling on the rival contentions of the parties to 18 November 1971. After a number of intermittent adjournments, he read the judgment seven months afterwards, that is, on 5 June 1972. On the question of whether the respondents were entitled to any sums over and above what is stipulated in their contracts of service, the judge held as reported in [1973] 1 G.L.R. 70 at p. 74 that “once interlocutory judgment is entered, the defendant is deemed to have waived and is precluded from relying on any previous agreement to pay a liquidated sum.” After delivering himself of a few broadsides, the judge held that the dismissal of the respondents was a nullity. The judge concluded as a necessary consequence of this holding, that the respondents remained in the employ of the bank and were entitled to their salaries from 30 June 1967, to the date of judgment, that is, 5 June 1972. He calculated this “less tax and other deductions” as ¢7,881.84 in respect of the first respondent and ¢10,832.40 in respect of the second respondent and entered judgment in their favour for these sums. The judge also awarded costs in favour of each respondent in the sum of ¢750.00.

The bank says that in so far as the judge held that its action in calling for the respondents’ resignation was a nullity, the latter was in error and that he should be reversed on this point together with the consequential award of damages to the respondents over and above the sums stipulated for in the contract of service. It also complains that the costs awarded in favour of the respondents are excessive and should be reduced.

The first point taken against the judgment attacked the learned judge’s conclusion that once interlocutory judgment was delivered, the bank was precluded from relying on the contract of employment. It was said that as the respondents relied on such contract to found their claim against

[p.270] of [1973] 2 GLR 265 the bank, the latter was entitled to rely on it to meet it. This contention seems to me well founded. I think, in any event, that the judge was wrong in entering interlocutory judgment against the bank on the facts of this case. The reason why a statement of defence was not delivered was satisfactorily explained. Indeed both parties had taken a common position on it. It seems to me to accord with public policy that solicitors should attempt, even at the stage at which the suit had reached, to promote a settlement rather than to foment litigation. I think in the circumstances, the coercive power of the court ought not to have been used to thwart the genuine efforts by the parties to reach a settlement.

In my judgment, the learned judge compounded his errors when he refused to be guided by the terms of the contract in quantifying the damages in favour of the respondents. The contract of service had itself contemplated the event which had happened and provided a genuine pre-estimate of the damages which the respondents were likely to suffer. The bank offered that sum to the respondents. The Judge himself relied on decided cases to show that in ordinary circumstances, the damages should be based on salaries due for the period of notice. He refused to decide the rights of the parties in accordance with the contract they themselves voluntarily entered into on the formal and highly technical point at p. 74 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.” Having shut out the contract on this arid ground, the judge felt able to award to the respondents damages far in excess of the sums agreed upon in the contracts. It is difficult to think that the bank can have felt anything but a rankling sense of injustice.

Even if the judge was entitled on the facts to have given interlocutory judgment to the respondents, that can only mean that the bank’s liability to pay some damages to the respondents was established. A judgment is interlocutory when the rights of the parties have not been finally determined. In this case, the bank’s liability to pay damages was concluded by the interlocutory judgment. The quantum of those damages remains to be determined in a subsequent inquiry. It is only then that the rights of the parties can be said to be finally determined. In assessing the damages, the respondents were entitled to produce evidence to inform the court as to what sums they were entitled to. I cannot see how the bank can be justly precluded from producing evidence to show that the respondents were entitled to less than they claim.

The learned judge produced no authority for his view that “once interlocutory judgment is entered, the defendant is precluded from relying on a previous agreement to pay a liquidated sum.” Even if such a procedural rule exists, it would, in my opinion, be inequitable to rely on it in defeasance of the substantive rights and obligations which the parties acquired by their agreement. Here, the contract expressly spelt out the sums to which the respondents were entitled in the events which have happened. The rights of the parties fell only to be judged by that contract. I cannot but conclude that the judge was in error in holding that

[p.271] of [1973] 2 GLR 265 the bank was precluded, by the mere fact of the entry of the interlocutory judgment, from relying on the contract of employment.

As I said, the judge also held that the dismissal of the respondents was a nullity and that they remained de jure in the service of the bank until the date of judgment. To found this conclusion, the judge sought to distinguish as a matter of law, the consequences of a wrongful dismissal of a servant by a private employer and by a statutory corporation. In the case of the former, the judge held that such dismissal, even though wrongful, operates to put an end to the contract, but in the case of the latter, the court can order him to be reinstated because the dismissal being wrongful, must be invalid. It was contended for the bank that no such distinction exists. We were accordingly invited to disaffirm the judge’s holding on this score. For my part, I find this contention difficult to resist. If the learned judge had held that if an employee of a statutory corporation was dismissed, one must look at the statute to decide what rights of dismissal were conferred and to consider whether or not the dismissal was permissible under the terms of the statute or any delegated legislation enacted under it, I should find nothing to criticise. But I do not find any warrant for the distinction which the learned judge sought to draw, apparently founded on the common law, as to the consequences of a wrongful dismissal by a private employer and a statutory corporation.

The learned judge did not profess to be laying down any new principles of law. He found inspiration for his somewhat ex cathedra pronouncement of the law on a number of cases decided in England. None of these cases laid down the law as widely as the judge did. Some of the cases indeed lend him no support. The one case which denied validity to the dismissal of an employee under a statutory scheme and held that a purported dismissal was a nullity is Vine v. National Dock Labour Board [1957] A.C. 488, H.L.

The facts of that case were as follows: The plaintiff, a dock labourer employed in the reserve port by the National Dock Labour Board under a scheme set up by the Dock Workers (Regulation of Employment) Order, 1947 (S.R. & O. 1947 No. 1189), was allocated work with a stevedoring company, but failed to report to them. A complaint lodged with the defendants was heard by a disciplinary committee appointed by the Local Dock Labour Board who upheld the complaint and purporting to act under clause 16 (2) (c) of the order, gave the plaintiff notice to terminate his employment with the defendants. He brought proceedings against the defendants claiming damages for wrongful dismissal and a declaration that his purported dismissal was illegal, ultra vires and void.

Regulation 16 (2) provides as follows:

“Where a registered dock worker available for work fails to comply with any of the provisions of the scheme, then without prejudice to and in addition to the powers conferred by clause 15 hereof, the local board may take any of the following steps as regards that dock worker—it may . . . (c) give him seven days’ notice of termination of employment; (d) dismiss him summarily.”

[p.272] of [1973] 2 GLR 265

It was held by the High Court and affirmed through the Court of Appeal to the House of Lords, that the dismissal was invalid since the local dock labour board had no power under the scheme to delegate to a disciplinary committee their disciplinary powers given by clause 16 of the order under which a man might be entirely excluded from the employment of a dock worker.

The ratio decidendi of this case is clear. It is that the statutory scheme did not permit the local dock labour board to delegate their power of dismissal to a disciplinary committee. This case is no authority for the proposition that an employee of a statutory corporation cannot be terminated “unless there is valid reason for such termination connected with the capacity or conduct of the employee or based on the operational requirement of the corporation.”

In the House of Lords, their Lordships lost no pains in stressing the singular nature of the case and the fact that the dismissal was directly or indirectly controlled by statute. Thus Lord Keith of Avonholm said at p. 507:

“This is not a straightforward relationship of master and servant. Normally, and apart from the intervention of statute, there would never he a nullity in terminating an ordinary contract of master and servant. Dismissal might be in breach of contract and so unlawful but could only sound in damages.

Here we are concerned with a statutory scheme of employment. One of its objects was to do away with the evils of casual employment at the docks. Another was to secure a regular supply of labour for shipping and unshipping merchandise. These objects are concisely stated in the scheme, echoing the words of the statute . . .”

The only other case in which a dismissal was held to be a nullity had nothing to do with a statute. It is McClelland v. Northern Ireland General Health Services Board [1957] 1 W.L.R. 594, H.L. also relied on by the judge. A clerk accepted from the board employment in which the grounds on which he could be dismissed were clearly spelt out. These included gross misconduct and inefficiency. There was also a provision for dismissal on failure to take or honour the oath of allegiance, and another related to the termination of the employment by reason of permanent ill health or infirmity. The appointment was said to be permanent and there was no provision for dismissal in other circumstances. The board purported to dismiss him on the ground of redundancy. In a split three-two decision, the House of Lords held that the board was precluded by its own offer and terms of employment from dismissing the employee save for the reasons specified in the contract of service. Lord Goddard who voted with the majority, inter alia, explained the basis of the decision as follows at pp. 601-602:

“Remembering the terms of the advertisement in conjunction with the provisions of condition 12, I think the fair conclusion is that the board offered and the appellant accepted employment on terms as

[p.273] of [1973] 2 GLR 265 secure as is in fact enjoyed by civil servants. Although a civil servant, as is well known, is employed at the pleasure of the Crown and can be dismissed at any moment, in fact once he has qualified by examination or probation and is taken on the establishment he is secure in his employment till he reaches the retiring age, apart, of course, from misconduct or complete inefficiency. I think, on the true construction of condition 12, the board debarred themselves from giving notice apart from the reasons specified therein . . .”

Accordingly, as the appointment was not validly terminated, the employee returned to the service of the board. No general proposition of law founded on the right of a statutory corporation to dismiss their employees can be built on the holdings in this case.

A case which seems akin to the Vine case and to which the learned judge referred with no fondness is Francis v. Municipal Councillors of Kuala Lumpur [1962] 3 All E.R. 633, P.C.

In that case, the appellant entered the employment of the respondent council and became a member of the permanent staff. The respondents were his employers, but by virtue of section 16 (5) of the Municipal Ordinance (Extended Application) Ordinance, 1948 of the Federation of Malaya the president had power to dismiss him. That subsection provides:

“The president may appoint such persons as he thinks fit to the offices shown on the list so approved as aforesaid and may remove such persons from office and appoint others in their stead, provided that the appointment and removal of persons to or from an office carrying a commencing salary of $200 a month and over shall be subject to the approval of the councillors.”

The appellant was supposed to have been dismissed at a meeting of the establishment committee at which the president was present. Subsequently an ordinary meeting of the council also endorsed the decision to dismiss him. The appellant sued the council arguing that his purported dismissal was ultra vires and void as his dismissal was not in accordance with section 16 (5). The Supreme Court of Malaya, differing from the trial judge, held that inasmuch as the dismissal was made by the establishment committee or the council, it was not in accordance with section 16 (5) and was on that account ultra vires, null and void. The court awarded him three months salary in lieu of notice but rejected a claim that he had a right to continue in the employment of the council. He appealed against this to the Privy Council. That court dismissed the appeal holding that the circumstances show that he was wrongly dismissed and was entitled to damages. The court took the common sense position as stated at p. 637 that “It would be wholly unreal to accede to the contention that since Oct. 2, 1957, he had continued to be and that he still continues to be in the employment of the respondent.”

[p.274] of [1973] 2 GLR 265

The Privy Council specifically referred to Vine’s case and said the circumstances were special and held that where there has been a purported termination of a contract of service, a declaration to the effect that the contract of service still subsisted, would rarely be made and would not be made in the absence of special circumstances because of the principle that the courts would not grant specific performance of a contract of service.

I do not think it necessary to burden this judgment with an examination of any further case law. The cases I have examined and to which the learned judge referred, provide no warrant for the distinction which the judge sought to draw between employees in public employment and those in private employment. To found his proposition, the judge also made recourse to the International Labour Organisation Recommendation No. 119 on the termination of employment at the initiative of the employer. He reproduced it at p. 77 as follows:

“ ‘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’.”

The judge himself concedes at p. 77 that “this recommendation has not yet been incorporated in the general law relating to private employment . . .” But it is difficult to resist the observation that it is on this recommendation that he stood to propound what he conceived to be the general law on public employment. The use which the judge himself makes of this recommendation, shows that its real object is to outlaw discrimination in employments. He says an employer may not engage only members of a particular race or colour, nor should an employer restrict engagement to members of his own tribe. In present-day conditions where civilised community is at war with racial legislation and discriminatory practices, this is an understandable recommendation to come from a world body like the International Labour Organisation and one can only hope that the pious hopes of the International Labour Organisation would inform the legislators of various countries and persons charged with engaging labour. But it is difficult to see its relevance in the context of this case. The respondents made no complaint of discrimination against the bank. On their own showing, they were forced to resign because the bank accused them, wrongly they say, of theft. In these circumstances, it is difficult to think that their case can be helped by I.L.O. Recommendation No. 119. In my opinion, that recommendation has no bearing on this case.

I think therefore that whether the respondents’ dismissal from the service of the bank was null or valid can only be determined by considering the Bank of Ghana Act, 1963 (Act 182), as a whole, its dominant objective and any provisions it has regarding the employment and

[p.275] of [1973] 2 GLR 265 dismissal of staff. Section 3 of the Act lists its principal objects. It is not necessary to read them but I think it accurate to say, its main statutory function is to act as a central bank for Ghana. It cannot carry on its functions save through human agents. Section 11 of the Act enables it to employ staff to carry on its activities and subsection (2) of that section states: “Employees of the Bank shall be engaged on such terms and conditions as shall be laid down by the Board.” Section 52 of the Act empowers it to make bye-laws not inconsistent with the Act for regulating “its constitution and other objects falling within the scope of its functions.”

The learned judge found that the bank in fact made these bye-laws and held by necessary implication, that the contracts of service of various categories of staff were provided for or authorised by these bye-laws. There is no evidence given to the court upon which the judge can justifiably hold that any of these bye-laws was other than perfectly valid. Indeed the judge expressly declined to examine these bye-laws. Clause 26 of the contracts of service which the bank entered into with the respondents reads as follows:

“An employee whose services are dispensed with or who is called upon to resign from the service shall be given, in the case of an officer, three calendar months previous notice in writing or in lieu thereof a sum equivalent to his salary for three months, and in the case of any other employee, one calendar month’s previous notice in writing or in lieu thereof a sum equivalent to his salary for one month.”

Thus, the bank was entitled, even without assigning any reason, to dispense with the services of any of its employees. Its only contractual obligation was to give prior notice or pay salary in lieu of such notice. But in practice, commercial morality and the sense of fairness of businessmen would inhibit the bank from discharging any of its employees without reason. In this case, the bank believed, rightly or wrongly, that the respondents were guilty of the dishonest offence of theft. The police must have found some substance in this because they arrested and charged them with that offence. It is while this prosecution was pending before the court that the bank exercised its option under clause 26 and called for the respondents’ resignation. That act is anything but null. In my opinion, it is perfectly valid. The only way in which the bank’s action can be faulted, is that it did not then pay or offer to pay to the respondents, the salaries to which they were entitled in lieu of notice. It is only in this limited sense that the respondents can say that they were wrongfully dismissed. But they are not without remedy and in the course of these proceedings, their salaries in lieu of notice were conceded.

The respondents were in no status position of any sort nor has their case the slightest affinity with Vine’s case. 1 think therefore that Mr.

[p.276] of [1973] 2 GLR 265

Quist was right in contending and that Mr. Ayisi was wrong in disputing that the respondents were entitled to no more than the bank conceded and in respect of which the court entered judgment in their favour on 22 October 1971. It follows that the sums of ¢7,881.84 and ¢10,832.40 adjudged in their favour on the basis that their dismissals were a nullity must be set aside.

The bank also complains that the costs of ¢750.00 awarded in favour of each respondent was excessive. In view of what 1 have said, the respondents were entitled to judgment in the court below as follows: the first respondent ¢109.47 and the second respondent ¢451.35. It is a platitude that costs are in the discretion of the judge but they must not only reflect the result of the suit, but must bear a reasonable relation to the amount of work that the preparation and conduct of the suit must have involved. Here, there were no complicated pleadings to settle, no witnesses were called and there was no trial of any sort. In so far as any professional skill was brought to bear on this suit, it is the attendance of counsel in court on two occasions, firstly, to ask for adjournment and secondly to argue a relatively simple motion. In my opinion, a reasonable amount of costs to award to each respondent, bearing in mind out of pocket expenses is as follows for the first respondent ¢35.00 and the second respondent ¢50.00.

Accordingly, I would allow the appeal and set aside that part of the judgment which awards damages of ¢7,881.84 and ¢10,832.40 respectively in favour of the respondents. I would not disturb that part of the judgment which awarded ¢109.47 and ¢451.35 respectively. I would however set aside the costs of ¢750 each awarded in their favour and substitute for them costs of ¢35.00 and ¢50.00 respectively. The respondents must pay the costs of this appeal.

JUDGMENT OF LASSEY J.A.

I agree.

JUDGMENT OF ARCHER J.A.

I also agree.

DECISION

Appeal allowed.

Respondents to pay costs of appeal.

S.E.K.