BABATUNDE AJAYI (APPELLANT)
v.
TEXACO NIGERIA LIMITED & ORS (RESPONDENT)
(1987) All N.L.R. 471
Division: Supreme Court of Nigeria
Date of Judgment: 12nd September, 1987
Case Number: (SC. 2309/1985)
Before: Bello, Obaseki, Aniagolu, Kazeem, Oputa JJ.S.C
The appellant was an operations manager with the 1st respondent and appointment was terminated by the 1st respondent for working against of the company. The appellant regarded the termination of his appointment as a breach of contract of service and so sued the respondents.
In his claim the appellant asked for a declaration that (I) he was still the operations manager, (2) an injunction restraining the 1st respondent, its servants and agents or otherwise from committing a breach of the said contract of employment. And alternatively N634,833.00 (Six hundred and thirty four thousand and Eight hundred and thirty three naira only) special and general damages for anticipatory breach alleged that his termination was motivated by malice.
It is noteworthy that the appellant pleaded threatened termination of appointment and not termination of appointment.
The respondents on the other hand denied that the termination was unlawful because they had a right to terminate an employee's contract under the "Employee's Handbook" once a notice of one month is given or salary is paid in lieu of notice. They further altered that not only was notice given they also paid the appellant 3 months salary and gave him all his entitlements.
After hearing all the evidence adduced the trial Judge dismissed the Appellant's claim for injunction but granted the alternative claim because he found the termination malicious.
It was against this judgment that the appellant now appealed on the grounds that (1) The Court of Appeal erred in holding that The Employee's Handbook governed The employment relationship between the parties when the document came into existence long after the employment contract with The Appellant had been established. (2) The court of Appeal erred in holding that the termination of the appellant was proper since it was in accordance with the terms of the Employee's Handbook. (3) The Court of Appeal erred in holding that the allegation of malice was unsubstantiated when ample evidence of malice was adduced. (4) The Court of Appeal erred in holding that there was no evidence to support the threatened termination.
HELD:
1. The "Employee's Handbook" contains The terms or conditions of service of all the local staff of the company and there was evidence that the appellant was bound by the handbook.
2. Where in a contract of employment there exists a right to terminate the contract given to either party the validity of the exercise of that right cannot be vitiated by the existence of malice or improper motive.
3. In an ordinary case of master and servant, a master can terminate The contract with the servant at any time with or without reasons.
4. Where an employee is guilty of gross misconduct his appointment could be terminated without notice and without wages and in the present case working against the interest of the employer amount to gross misconduct.
5. Where a contract of service makes provisions for termination of contract and the provisions are complied with, as in the present case, the question of anticipatory breach does not arise.
6. The exercise of the right of determination of employment by the respondent employer in accordance with the service contract does not amount to a breach of contract.
7. Parties are bound by their pleadings and the Court is not entitled to consider claim not set out in the Plaintiff's statement. The appellant only pleaded anticipatory breach and the court cannot make a case of wrongful dismissal for him.
Appeal dismissed
Mr Kayode Sofola for Appellant
Mr George Nicol for Respondents
Cases referred to
1. Alran v. Eshiett (1977) SC89 at 96-97
2. Boston Deep Sea Fishing Co v. Ansell 12999 (4; Ch,B,44)
3. Daniels v. Shell B.P. (1962) 1 ALL NLR 19
4. Ebba v. Ogodu (1984) 4 SC 92, (1984) 1 SCNLR 372
5. Egonu v. Egonu (1978) 11-12 SC at 133
6. Ekpenyong & Ors v Nyong & Ors (1975) 2 SC 71 at 80
7. Emogokwe v. Okadigbo (1973) 5 YC. 2130 127
8. Eperokun v. University of Lagos (1986) 4 NWLR 162,193/194
9. George v. Dominion Flour Mills Ltd (1963) 1 All NLR. 71
10. Hochester v Dela Tur (1853) 2 E & B 678
11. John Stone v Milling (1886) 16 Q.B.D. 460
12. Metalimpex v. A.G. Leventis (Nig) Ltd (1976) 2 SC 91
Obaseki, JSC. On the 30th day of June, 1987, after hearing the submissions of counsel for the appellant and counsel for the respondents and reading the written briefs of arguments filed by the parties together with the record of proceedings, judgments of the Court of Appeal and the High Court, i.e. the two courts below, I, in concurrence with my learned brothers dismissed this appeal and reserved my reasons for the judgment till today. I now proceed to give them.
The claim filed by the appellant as plaintiff against the respondents as defendants in the High Court of Lagos State Holden at Lagos as set out in paragraph 29 of the statement of claim reads:
"the plaintiff claims against the 1st defendant company:
1. A declaration that:
(a) The plaintiff is the Operations Manager of the 1st defendant company under a contract of employment;
(b) Any breach of the said contract of employment between the plaintiff and the 1st defendant company is illegal, invalid, ultra vires, null and void and of no effect;
2. An injunction restraining the 1st defendant company by itself, its servants and/or agents or otherwise from committing a breach of the said contract of employment existing between the plaintiff and the 1st defendant company or in any way interfering with the plaintiff in the performance of his duties as Operations Manager; ALTERNATIVELY, the plaintiff claims against the 1st defendant company N634,833.00 special and general damages for anticipatory breach of contract.
Particulars
(i )Salary and other emoluments and benefits for 9 1/2 N612,009.00
years at N64,422.00 per annum
(ii) Pension 20,000.00
(iii) Accrued Leave 1,824.00
(iv) Leave Bonus 1,000.00
Total N634,833.00
The plaintiff also claims an injunction against the 2nd and 3rd defendants jointly and severally from wrongfully unlawfully inducing a breach of the plaintiff's contract of employment on the part of the 1st defendant company or ALTERNATIVELY, the sum of N634,833.00 damages."
First defendant company counter-claimed against the plaintiff in paragraph 14 of the statement of defence and counter-claim as follows:
"The dwelling house at Plot 866A Victoria Island, Lagos was allocated to the plaintiff for his occupation and use. He was also allowed the use of Toyota Crown Saloon car Registration No. LAA 2746. Both the said dwelling house and car belong to the 1st defendant and are still in the possession of the plaintiff.
Wherefor, the 1st defendant counter claims as follows:
(a) for an order that the plaintiff do give up possession of the said premises at and being plot 866A Victoria Island, Lagos, to the 1st defendant;
(b) For an order that the plaintiff do surrender Toyota Crown Saloon car Registration No. LAA 2756 to the 1st defendant."
Pleadings were filed and served and the issues joined came up for trial before Bada, J.
After hearing evidence of witnesses called by the parties, addresses of counsel for the parties, the learned trial Judge delivered a considered judgment.
(a) dismissing the plaintiff's claim for declaration for an order of injunction; and
(b) granting the alternative claim for damages assessed at N34,212.50
In his judgment, the learned trial Judge observed and found as follows:
"Although there is no evidence before me that the powers as to the management of a business of a company as set out in Article 82 had been entrusted to and conferred upon the 2nd defendant, it is my view that since the plaintiff admitted that the 2nd defendant had power to take disciplinary action against him such power would include power to terminate
Defence learned Counsel's submission in the main, was on Exhibit D1 which he submitted the 1st defendant complied with as to notice of termination, that is, one month's notice or a month's salary in lieu and that in this case, the plaintiff was paid 3 months' salary in lieu of notice together with all his entitlement. While I am in agreement with the submission of learned defence counsel on this point, I am of the view that his submission would have succeeded in a case where an employer terminates the services of the employee under the contract between the parties without adducing any reason for it but under the contract simpliciter. Exhibit D1 does not provide for any disciplinary measure against an employee. Clause 3 paragraph 2 of Exhibit D1 on which the defence is relying provides for period of termination of confirmed officer without more. The threatened termination of the plaintiff was based solely on the contract between the parties but because of the reasons contained in Exhibit p4 on which the plaintiff testified were prompted by malice of the 2nd and 3rd defendants against him, then question arises: Was it not incumbent on the defendants...to rebut this evidence in view of their denial of that paragraph of their statement of defence?
In the present case, there is no evidence before me to controvert the evidence of the plaintiff that the exercise of the 2nd and 3rd defendants in connection with this matter was malicious and I cannot, but hold that the threatened termination of the plaintiff was unlawful.. In the circumstances, I cannot make the declarations prayed for."
(Italics mine)
By this finding, it should be observed that it was the threatened termination that was unlawful. There was no finding that the employment was terminated or that the termination was wrongful. What is "anticipatory breach" of a contract? It is a breach of contract caused by the repudiation of obligations not yet ripe for performance. As Lord Blackburn puts it in Mersey Steel and Iron Co. v. Naylor Benzon & Co. (1884) 9 App Cas 434:
"Where there is a contract to be performed in the future, if one of the parties has said to the other in effect.
'If you go on and perform your side of the contract, I will not perform mine'
that in effect amounts to saying 'I will not perform the contract.' In that case, the other party may say 'you have given me distinct notice that you will not perform the contract, I will not wait until you broken it, but I will treat you as having put an end to the contract and if necessary I will sue you in damages, but at all events, I will not go on with the contract'.
It does not appear that this case falls within the category of cases of anticipatory breach of contract.
Where in a contract of employment provisions are made for the termination of the contract and the provisions are followed or complied with to terminate the contract, the question of anticipatory breach does not arise. The exercise of a right of termination of a contract in accordance with the contract does not amount to a breach of the contract. A threat to terminate an employee's employment remains only a threat and does not without more amount to a wrongful dismissal or a breach of contract of employment.
The defendants/respondents were not satisfied with the judgment of Bada, J. particularly the portion in which the High Court found:
"(a) That the threatened termination for the plaintiffs' employment under the 1st defendant was wrongful;
(b) That the defendants were liable in damages to the plaintiff for threatened termination of employment or anticipatory breach."
The defendants/respondents therefore took the matter on appeal to the Court of Appeal and the grounds of appeal filed and argued were:
(1) That the learned trial Judge erred in law in holding in an action for breach of contract, that the termination of the plaintiff's appointment under the 1st defendant was wrongful when no satisfactory proof of contract of employment relied on by the plaintiff was adduced in evidence;
(2) That the learned trial Judge erred in law in holding in an action for breach of contract, that the termination of the plaintiff's appointment under the first defendant was wrongful because the 2nd and 3rd defendants acted from selfish irrelevant and improper motives when there was no evidence before him that in considering the actions of the 1st defendant and its agents under the plaintiff's contract of employment, motive was relevant;
(3) That the learned trial Judge erred in law in holding that the termination of the plaintiff's appointment under the 1st defendant was wrongful because the 2nd and 3rd defendants acted from improper motives when there was no proof whatsoever before him that the said defendants in fact so acted.
(4) That the judgment is unreasonable, unwarranted and cannot be supported having regard to the evidence;
(5) That the damages awarded to the plaintiff are excessive in that the award ran counter to:
(a) the law relating to the award of damages in cases of wrongful dismissal;
(b) the stipulation as to payment of salary in lieu of notice contained in the only proven contract of employment between the plaintiff and the 1st defendant."
The appeal came up before the Court of Appeal and was heard by the Court (Coram Ademola, Nnaemeka-Agu and
Mohammed, JJCA.) on the 18th day of February, 1985. In a reserved well considered judgment delivered on the 18th day of March, 1985, the Court of Appeal unanimously allowed the appeal and set aside the decision of the High Court in the matter Suit No. LD/354/79 delivered on the 2nd day of November 1979 and dismissed the claim in toto with costs fixed at N700.00 in the Court of Appeal and N300.00 in the High Court. In the lead judgment delivered by Mohammed, JCA. (concurred in by Ademola and Nnaemeka-Agu, JJCA), the learned Justice observed and found in his own words:
"On the issue of period of service, it has been spelt out in exhibit D1 that a confirmed employee could have his service terminated by either party by giving thirty (30) days notice in writing of paying equivalent of one month basic salary if such termination is to take immediate effect. I am satisfied that all due processes have been followed in the case of termination of the respondents' employment with the 1st appellant. There was therefore no breach of any conditions of respondent's employment when 1st appellant served him with notice of termination of his employment with them.
The learned trial Judge's finding should have been based on these facts
It was an agreement accepted by both parties in exhibit D1 that each party could give the other one month notice or one month basic salary in lieu of notice to cause an end to the contract of employment. The 1st appellants were in fact generous enough to give three months salary in lieu of notice and, in my view, the contract of service between them had been validly terminated
In view of the foregoing, I hold that the learned trial Judge was quite in error to award damages to the respondent for what he claimed as anticipatory breach of contract. The appeal must succeed and it is allowed. The judgment of Bada, J. in suit No. LD/354/79 delivered on the 2nd day of November, 1979 is set aside."
The Court of Appeal however directed, on the issue of other entitlements that
"the appellants having offered the total sum of 32,867.59 less outstanding debt claims against the respondent claim of N12,335.08, must go ahead and pay the said amount to the respondent. I shall award N700.00 costs in favour of the appellants and N300.00 in the court below."
This direction was necessary to forestall or prevent further litigation on the issue of other entitlements following the lawful termination of appointment.
The plaintiff was dissatisfied with the judgment of the Court of Appeal and proceeded to file his notice of appeal against the judgment to this Court. Five grounds of appeal were filed along with the notice and they read:
"(1) The learned Justices of the Court of Appeal erred in law in holding that Exhibit D1 governed the employment relationship between the parties when that document came into existence long after the employment contract had been established and when no evidence of its adoption by the appellant;
(2) The learned Justices of the Court of Appeal erred in law in holding that the termination of the plaintiff's employment was proper since it was in accordance with the terms of Exhibit D1 when the said Exhibit was irrelevant to the facts of the case;
(3) The learned Justices of the Court of Appeal erred in law in holding that the allegation of malice was unsubstantiated when ample evidence of malice was adduced at the trial by the appellant which evidence was unchallenged by contrary evidence or attacked under cross examination by the defendants;
(4) The learned Justices of the Court of Appeal erred in law in interfering with the finding of learned trial Judge on the applicability of Exhibit D1 to the case when the said trial Judge had properly evaluated the evidence thereon before coming to a balanced decision which was neither capricious nor perverse;
(5) The learned Justices of the Court of appeal erred in law in holding that there was no evidence to support the threatened termination of the plaintiff's employment since the trial court had dismissed his claim for declaration when the Court of Appeal as well as the trial court had held that, "both parties are in agreement that a contract of employment was established between" the parties."
The relief the appellant sought from the Supreme Court was the reversal of the decision of the Court of Appeal and the restoration of the decision of the High Court.
The questions for determination in this appeal as formulated by the appellant in his brief are:
(1) whether or not in all the circumstances, the Court of appeal ought to have interfered with the findings of the learned trial Judge;
(2) whether it is correct as the court of Appeal held that Exhibit D1 governed the quantum of the plaintiffs entitlements;
(3) whether the CouVrt of Appeal was correct in holding that the termination of the plaintiff's employment was proper and that the allegation of malice was unsubstantiated.
The short answers to the above questions must, in the light of the evidence on record, be in the affirmative.
It is to be observed that the appellant failed to appeal to the Court of Appeal against the dismissal of his main claims for
(1) a declaration that he is 'still the Operations Manager of the 1st defendant/respondent company under the contract of employment; and
(2) An injunction restraining the 1st defendant/respondent by itself, its servants, and or agents or otherwise from committing a breach of the said contract of employment existing between the plaintiff/appellant and the 1st defendant/respondent or in anyway interfering with the plaintiff/appellant in the performance of his duties as Operations Manager.
It is also noteworthy that the plaintiff/appellant, apart from using the term anticipatory breach of the contract of employment' neither pleaded nor proved the anticipatory breach. He only pleaded and proved threatened termination of appointment. A threat to terminate a contract of employment is only a threat. It is only when the employment is terminated that the circumstances can be examined to ascertain whether the contract is validly terminated or wrongfully terminated. If it is validly terminated, there can be no breach of contract.
But if the termination violates a term or condition of the contact, then the termination is wrongful. If there is no wrongful termination of employment, there can be no liability for breach of contract of employment. It is therefore necessary at this juncture to set out the important paragraphs in the pleadings to see if facts amounting to anticipatory breach have been pleaded. Paragraphs 11, 12, 13, 14, 15, 19, 20, 21, 22, 23, and 24 of the statement of claim which I consider material for the purpose of this judgment read:
"11. The plaintiff has always been and still is ready and willing to serve the 1st defendant company up to the date of retirement;
12. By letter dated 1st February, 1979, the 2nd defendant wrote to the plaintiff compelling him to proceed on leave on the ground that his future relationship with the company was under review, the plaintiff will contend that the hearing of this action that the said letter is invalid, null and void and of no effect;
13. By another letter dated Friday 23rd March, 1979, the 2nd defendant again wrote to the plaintiff inviting him to see him between 2.00p.m and 4.30p.m. that day;
14. In consequence of the matters pleaded in paragraph 13 of this statement of claim, the plaintiff called on the 2nd defendant on the said day in his office at 4.00p.m. whereupon the said 2nd defendant, in the presence of the 3rd defendant asked the plaintiff to tender his resignation of appointment as Operations Manager to the 1st defendant company and that if he failed to do so, he would be dismissed from the service of the said 1st defendant company. the plaintiff was given up till Monday 26th March, 1979 to hand over his letter of resignation;
15. The plaintiff did not agree to resign his appointment because of the matters herein before pleaded and also because of national interest and commenced this action on Monday 26th March, 1979 against the defendants.
19. The defendants have wrongfully suspended payment of the plaintiff's salary and other benefits without just cause or excuse;
20. Alternatively, the plaintiff states that by refusing to pay his salary and other benefits as stated in paragraph 19 herein, the 1st defendant company anticipates committing a breach of the contract between it and the plaintiff which the plaintiff contends will amount to a wrongful, illegal, malicious and unconstitutional act and contrary to the Rules of Natural Justice.
21. The 1st defendant company has no right to terminate the plaintiff's contract of employment before he attains the age of 60 years;
22. That no amount of compensation will be adequate to the plaintiff for any breach of his contract of employment;
23. The 2nd and 3rd defendants are wrongfully and unlawfully inducing the 1st defendant company to terminate the said plaintiff's appointment without just cause or excuse;
24. The plaintiff has not been able to secure any employment in spite of several efforts to get an alternative job." (Italics mine)
Nowhere was termination of employment pleaded. The plaintiff has therefore failed to plead the wrongful termination of employment. The defendants, in paragraph 3 of their statement of defence admitted paragraphs 13, 14 and 15 of the statement of claim and in paragraph 2 of the statement of defence, denied paragraphs 19, 20, 21, 22, and 23 of the statement of claim.
In paragraph 4 of the statement of defence, the defendants pleaded that they were not in a position to admit or deny paragraph 24 of the statement of claim. The defendants then proceed to plead in paragraphs 6, 7 and 8 as follows:
"6. With regard to paragraph 11 of the statement of claim, the defendants aver that by a letter dated 26th March, 1979 addressed to the plaintiff, he was informed that his services under the 1st defendant were no longer required as from 1st April, 1979. The defendants will rely on this letter at the trial of this action;
7. With regard to paragraph 14 of the statement of claim, the defendants aver that the plaintiff was not "dismissed" from his employment under the 1st defendant in which event he would have lost his entitlements. His appointment was merely