COURT OF APPEAL
DATE: 5 APRIL 1971
APALOO, JIAGGE AND SOWAH
CASE REFERRED TO
McClelland v. Northern Ireland General Health Services Board [1957] 1 W.L.R. 594; 101 S.J. 355; [1957] 2 All E.R. 129; [1957] N.I. 100, H.L.
NATURE OF PROCEEDINGS
APPEAL from a decision of Edusei J. in the High Court, Accra, unreported; digested in (1968) C.C. 60 in which the respondent was awarded damages for his wrongful dismissal from the employment of the appellants.
COUNSEL
Quashie-Idun for the appellants.
Reindorf for the respondent.
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JUDGMENT OF APALOO J.A.
On 15 December 1957, the respondent was employed by the appellant company (hereinafter called the company) as a surveyor at a monthly salary of £G85. The appointment was in writing and contains the terms and conditions of service. It is dated 2 April 1958, and was produced in evidence as exhibit B. The appointment was for an indefinite period. Apparently, the earlier letter of engagement was a temporary one because in March 1960 the company sent to the respondent, another letter of engagement. It also sets out in slightly greater detail the terms and conditions of his engagement (exhibit C.) The respondent acknowledged these terms and expressed his concurrence to them as follows: “I agree to the above terms and confirm that the above letter of engagement may be deemed to have superseded the temporary letter of engagement dated 2nd April, 1959 and to have been effective as from 1st March, 1960.”
It seems that the respondent’s services met with the company’s satisfaction because in October 1962 he was promoted to what was described as the company’s supervisor grade. He was again given a new letter of engagement and this contains as usual, the terms and conditions of his employment (exhibit D). One striking feature of all these letters of his engagement is that, each contains a clause expressly conferring on the company a right to terminate the respondent’s appointment and providing the length of notice that may be given prior to such termination. The letter of engagement which was current at the date material to this case (exhibit D), by paragraph (4) (a), provides as follows: “(4) (a) Your engagement may be terminated at any time by one party giving to the other not less than a month’s notice in writing.” This clause was amended to the respondent’s advantage by a letter addressed to the latter from the company and dated 29 January 1965 (exhibit 1). The relevant part of it reads:
“It has now been decided that notwithstanding anything contained in your new letter of engagement, you will be given a personal concession as a former member of the company ‘A’ staff, and the clause covering notice by the company will remain as previously. This is to say, the company may terminate your engagement by
giving three months’ notice in writing instead of the one month stipulated in paragraph 4 (a) of your new letter of engagement.”
If anything can be said to be clear in the contract under which the respondent was employed, it is the provision regulating the reciprocal determination of the engagement. The language used does not give rise to any problem of interpretation. The current letter of engagement appears to have been sent to the respondent under cover of the company’s letter of 25 September 1962 (exhibit E). In that letter, the company informed the respondent that the Exchange Control Act, 1961 (Act 71), forbade it from remitting moneys to service the provident fund and pension scheme to which the respondent was a contributor. It therefore felt obliged to suspend the scheme. The company gave other information about the scheme generally and said in paragraph (8) that:
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“Members of the regional staff are able to look forward to a career with the company which, subject to satisfactory service, should take them to normal retirement age. The company would like to have a pension scheme in order that staff would have a pension when they retire.”
It is this clause that lent some plausibility to the judgment appealed against. On 11 October 1965, the company, acting by its general manager, terminated the respondent’s appointment with immediate effect. As he was entitled under the amended clause (4) of the letter of engagement to three months’ notice, he was paid three months’ salary in lieu of notice. He was also paid his provident fund, leave and other entitlements and made no complaint about these.
It seems the respondent was aggrieved at the abrupt termination of his employment but the real basis of his grievance is unclear. He then instructed a firm of solicitors which on 26 January 1966, wrote to the company demanding to know the reason for the sudden termination and obliquely threatening legal proceedings in default. In so far as that letter made any concrete claim, it is that the respondent was entitled to full pay for October 1965, and not proportionate salary up to the date of his dismissal. The company’s solicitors replied to that letter on 10 March 1966, and promised to reply fully after taking instructions from the company. As that reply was not forthcoming, the respondent on 17 March 1966, commenced proceedings. The writ claimed damages for wrongful dismissal. As the respondent sought damages for wrongful dismissal, there must have been between him and the company, a contract which the latter had broken entitling him to damages. No such contract was averred in the writ of the pleadings filed on behalf of the respondent. In so far as any part of the pleadings provide any information as to the basis of the respondent’s claim for damages, it is paragraph (4) and (5). These say:
“(4). Plaintiff wrote to the defendant company asking for the reasons for his termination but defendant never communicated the reasons to plaintiff.
“(5). Plaintiff asserts that he has not been guilty of any conduct that could warrant his dismissal and he has never been told of any such conduct and that his dismissal was unlawful and without just cause.”
It would seem that the respondent or his legal advisers read the agreement between the parties as imposing an obligation on the company to give reasons for terminating the former and in any case, the respondent assumed that he was dismissed for misconduct and he claimed that such action was “unlawful and without just cause.” The company denied that it was under any obligation to give the respondent reasons for his termination and claimed that his termination was effected in accordance with the terms of his letter of engagement. The company claimed it would rely
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on the terms of the letter of engagement at the trial. The respondent joined issue with the company on this averment.
In due course, issues were settled by the respondent on a summons for directions. Some of the questions formulated for trial are not of great moment but the one which sought the court’s aid in resolving the substantial difference between the parties reads as follows: “(d) Whether or not the plaintiff was dismissed in accordance with his letter of employment dated 1st day of October, 1962 as varied by a letter dated 28th January, 1963.” The trial eventually opened before Edusei J. in the High Court, Accra, when the respondent and one witness gave evidence. That evidence broke no fresh ground and was in essence a reiteration of the facts alleged in the pleading. The respondent produced in evidence the various letters of engagement (exhibits B, C and D) and the company’s letter terminating his appointment (exhibit C) and its variation (exhibit H). The company offered no evidence and built its defence on the contracts of service produced by the respondent. The learned judge concluded the case in favour of the respondent. He did not decide the one vital issue submitted for his decision, namely, whether the “plaintiff was dismissed in accordance with his letter of employment dated 1st October, 1962” but found that there was a collateral contract to employ the respondent for life subject to satisfactory service. He held that the contract was broken and he accordingly awarded damages in favour of the respondent for its breach. The company invites us to say that that conclusion was wrong and seeks by this appeal to have it reversed.
Mr. Quashie-Idun for the company, made three main complaints against the judgment, first, that the judge was wrong in relying on the letter of 25 September 1962 (exhibit E) as the basis of the contract between the parties; secondly, that the judge failed to interpret and give effect to the respondent’s letter of engagement (exhibit D) and thirdly, that the judge was in error in holding that the respondent was permanently employed by the company until he attained the age of 50 years. Mr. Reindorf for the respondent, replied that the judgment was right because, first, paragraph (8) of the letter of 25 September 1962 was, as the judge said, a collateral contract whose breach has been proved; secondly, the letter (exhibit E) and the letter of engagement (exhibit D) should be read together and if so read, justified a finding that the respondent was employed subject to satisfactory service for his working life and thirdly, the company have failed to justify the respondent’s dismissal.
I think it must be said in all fairness to the learned judge, that he put a lot of industry into the preparation of his judgment and cited and relied on many English decisions to which neither counsel drew his attention. But with all due deterrence to him, his conclusion is difficult to support. The ratio decidendi of his judgment is that as the letter of 25 September 1962 (exhibit E) which spoke about the pension and provident fund scheme was dated a week earlier than the letter of engagement (exhibit D) the former.
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was collateral to the latter because as the judge put it: “The representation made in paragraph (8) of exhibit E conditioned the acceptance of exhibit D.” Not only was that not the respondent’s case at any time, but there is in fact no evidential basis for this finding. In his solicitor’s letter (exhibit J) before the action commenced, no such complaint was made on behalf of the respondent. In his pleadings, the respondent’s grievance was limited to the fact that no reason was given for his abrupt termination. In his evidence, he did not suggest even faintly, that he read paragraph (8) of exhibit E as offering him a life-long employment. What he himself produced as the basis of his contract were his various letters of engagement. Although he tendered exhibit E he said nothing about it which remotely lent colour to the judge’s finding related above. When he was faced with the current letter of engagement in the company’s statement of defence, he himself formulated as an issue for determination the question whether he “was dismissed in accordance with his letter of employment.” I think it reasonable to say that the respondent himself never at any time thought that Exhibit E was part of his letter of engagement or was in any way relevant to it. Quite apart from the subjective question of what the respondent himself thought of exhibit E, in relation to his contract of service the common-sense of this matter is against the judge’s finding that paragraph (8) exhibit E conditioned the acceptance of the latest letter of engagement (exhibit D). The very first employment which the respondent accepted from the company, offered him a salary of £G85 and stipulated one month’s notice for termination on either side. The current latter of engagement offered him more advantageous terms. He was promoted and his salary was considerably higher than what was offered him during his first association with the company. The provisions for termination in exhibit D were no worse than what were contained in his first letter of engagement (exhibit B).
In the circumstances, it is hardly conformable with good sense to infer that the respondent would have declined these terms had the letter (exhibit E), which spoke only about the pension scheme and the provident fund, not contained one isolated sub-paragraph in which the company hoped that the regional staff “could look forward to a career which subject to satisfactory service should take them to normal retirement age.” In my opinion, it was not open to the learned judge to find that aside from his letter of engagement (exhibit D), exhibit E evidenced another collateral contract of employment whose terms are capable of derogating from the clear stipulations in exhibit D. In so far as the learned judge purported to find that “apart from exhibit D the provisions of exhibit E constituted a separate and another contract between the plaintiff and the defendant,” he was, with respect, wrong and his eventual conclusion in so far as it was based on this finding, should be disaffirmed.
Mr. Reindorf offered no more than a token argument in support of the learned judge’s finding that there had been a collateral contract between the parties. In the end, he said, he preferred to leave the aspect of the matter to us. His main thesis was, that the letter of engagement
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(exhibit D) and what I would call the pension scheme letter (exhibit E) should be read together as one document. He argued that there was no contradiction between the two and if so read, they justified the learned judge’s conclusion that the respondent was employed for life subject to satisfactory service and that the company had failed to justify the dismissal. Although only a small point, counsel who appeared for the respondent in the court below, did not think that these two documents could be married together. He is on record as having submitted to the court that: “[P]aragraph (8) of exhibit E contradicts paragraph (4) (a) of exhibit D, and even if the two are read together the reasonable inference is that the plaintiff’s appointment can be terminated by three months’ notice only if his work is unsatisfactory” I am in agreement with him that these two provisions cannot be harmonised as one single contract for the very good reason that they dealt with different matters. One sets out the terms of the contract between the parties and regulates their rights and liabilities interse. The other dealt with the entirely subsidiary matter of the pension and provident fund. I can see no reason whatsoever why they should be read as one contract.
In my opinion, these two documents should be read as what they really are, that is, one evidencing the contract between the parties (exhibit D) and the other relating the incidents of that contract (exhibit E). Read that way, there is no repugnancy between the two. Under the terms of the contract, either party may terminate it by giving the other notice. In the case of the company, it can only do so after giving the respondent three months’ notice or paying him three months’ salary in lieu of notice. The respondent may, for his part, sever his association with the company by giving it one month’s notice. The right to the enjoyment of a pension is contigent on neither party exercising his right of determination until the respondent attains the age of 50 years. The hope expressed by the company in paragraph (8) of exhibit E can be no fetter on either party exercising the right to determine the hiring by notice in the manner stipulated in exhibit D. Egged on by counsel for the respondent, the learned judge endevoured to read these two documents as forming one contract. He was, so to speak, trying to effect a marriage between two incompatibles and foundered in the result.
I believe, for the purpose of determining whether or not the termination of the respondent was wrongful, that exhibit E is wholly irrelevant. Whether the respondent succeeds or fails in this action depends upon the proper construction of his current letter of engagement (exhibit D), or as the respondent himself formulated it as issue (d) in the summons for directions: “Whether or not the plaintiff was dismissed in accordance with his letter of employment dated 1st October, 1962 as varied by a letter dated 28th January, 1963.” The rights and obligations of the parties on this issue have been exhaustively set out in paragraph (4a) of exhibit D as amended. I have already read that paragraph and 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
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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 on which infinite speculation is possible. But it is not germane to the true construction of paragraph (4) (a) of exhibit D.
As I said , the learned judge cited no fewer than seven English decisions, all but two of which dealt with collateral contracts. In view of my finding that there was no collateral contract, it is unnecessary to discuss them. With regard to the two which dealt with contracts of service, it is sufficient to say that the learned judges were there concerned with construing the particular provisions of specific contracts. Neither of these cases decided any novel point of principle and indeed in the latter of the two cases, namely, McClelland v. Northern Ireland General Health Services Board [1957] 2 All E.R. 129, H.L. there was a sharp conflict of judicial opinion on the true meaning and effect of clause (12) of the contract. In so far as either of these cases involved any application of principle, it is the age-old one that the courts must respect the sanctity of agreements.
I conclude that the respondent’s contract was determined in accordance with paragraph (4) (a) of his letter of engagement and that the claim for damages for wrongful dismissal did not lie. As the learned judge thought otherwise, I think, with respect, he erred and his judgment ought to be reversed.
JUDGMENT OF JIAGGE J.A
I agree.
JUDGMENT OF SOWAH J.A.
I agree
DECISION
Appeal allowed.
T.G.K.
