I. O. Olaniyonu V. British American Insurance Co. Ltd (1974)
LawGlobal-Hub Lead Judgment Report
SOWEMIMO, JSC.
In Suit No. I/104/68 tried in the Ibadan High Court, the Plaintiff claimed against the Defendants as follows:-
PAGE| 2 “The Plaintiff’s claim against the Defendants is for the sum of £8,000 (Eight Thousand Pounds) being special and general damages for the wrongful termination of the Plaintiff’s employment by the Defendants on the 13th of April, 1968 at Ibadan. The Plaintiff was up to and including the 13th of April, 1968, a Staff Manager under the Defendant at its District Office at Ibadan in the Western State of Nigeria. Summons £50. Service 2/- Mileage 4/- Trpt. 1/- £50 7/- Pd.CR. 167467/28/6/68.” PAGE| 3 In the Plaintiff’s statement of claim he averred inter alia as follows:-
“The termination of the Plaintiff’s employment with the Defendant as a Staff Manager is unreasonable and wrongful. The unreasonable and wrongful termination of the Plaintiff avers that no monetary payment “in lieu of notice” was made to him by the Defendant.
That the Plaintiff as Staff Manager and by the nature of his duties in his employment with the Defendant is entitled to not less than six months notice of the termination of his employment. The damages suffered by the Plaintiff are itemised as follows:- (a) Salary from week ) commencing from ) £701 13s 7d 15/4/68 to 15/10/68 ) (b) Alternatively to (a) above or salary up to and inclusive of the date of judgment.
PAGE| 4 (c) Leave pay from ) November 9th, 1964, to ) April, 1968, at 2 weeks ) £155 12s 8d per year ) (d) Commission already accrued due £233 12s 5d (e) General Damages £6,909 1s 4d £8,000 0s od The defence of the Defendants as set out in the statement of defence reads as follows:- “With further reference to paragraph 10 of the Statement of Claim, the Defendants will contend at the trial of this action that there was in existence a contract of service between the parties and that the letter of termination complained about was in accordance with the letter and spirit of the said contract of service.
The Defendants deny the allegation of wrongfulness and unreasonableness contained in paragraphs 11 and 12 of the Statement of Claim, and will contend at the trial that the termination of the Plaintiff’s employment was in accordance with agreement between the parties. Paragraphs 13, 14 and 15 of the Statement of Claim are denied by the Defendants.”
PAGE| 5 The learned trial judge, Ayoola, J., in his judgment said as follows:- “I hold the view that although the Plaintiff was promoted to the rank of Staff Manager in July, 1965, he still remains an ‘Agent’ of the Defendant Company within the meaning, spirit and contemplation of Exhibit K.
It has not been shown that the duties of a Staff Manager are not within the duties required of an “Agent” as set out in Exhibit K. On the contrary the plaintiff testified that for “Sales” made, which shows that the Staff Manager also can solicit new applications for premium. At least there is no evidence before me that he cannot do so. Exhibits C & M are mere Circulars informing Staff Managers of the rate of Compensation to be paid for the particular Fiscal year to which they referred, and they are so headed.
They are some sort of “Practors” E Edict “issued by the Vice President of the Company as “Management memorandum” for the year. Such “Edicta” can vary from year to year.” The Plaintiff, not satisfied with the judgment of Ayoola, J., appealed to the Western State Court of Appeal. After hearing arguments, judgment was entered in favour of the appellant. It was held that Ex. K executed in January, 1965, setting out the conditions of service between the parties was no longer subsisting when the Plaintiff was promoted in July, 1965.
It was also held that Exs. C & M created a new agreement which that court regarded as a yearly contract. The Western State Court of Appeal in its judgment stated inter alia:-
PAGE| 6 “To our mind, Exs. AC KM are relevant in regard to the relationship between the parties, and to this end we agree with Mr. Odofin’s submission Ex. A was the first agreement between the parties whereby the Appellant was appointed as ‘a home service Agent’. His basic salary was £260 per annum, and he was to receive commission as stipulated in the agreement.
He was also entitled to two weeks vacation leave, with pay. That agreement further stipulates that to determine his contract of service with the Respondent a week’s notice would be sufficient on either side. However, as the Appellant pleaded and as Respondent admitted (the Appellant also gave evidence on this point in the court) he was, in July, 1965, promoted to the post of Staff Manager, Ex.C, which deals with the basic compensation payable to Service Managers makes his basic pay to be “weekly base pay in lieu of weekly premium and ordinary collection commission”.
He would also as Staff Manager be entitled to weekly premium, quarterly bonus and annual bonus, Under termination of agreement it is stipulated that the agreement was for fiscal year 1967 only. Exhibit M makes that agreement relate to the fiscal year 1966 only. When the Appellant was cross examined by learned counsel representing the Respondent he said that he was promoted in July, 1965, he signed Ex. K in January, 1965.
This was before his promotion to the status of Staff Manager. The Appellant also said that he was paid on weekly basis when he was Staff Manager, though Exhibits C and M are for fiscal years and not of weekly duration. In regard to the question of leave pay the Appellant deposed that the District Manager told him he would go on leave whenever time permitted. In re-examination he went on further and said that the Staff Managers earn commissions on sale and not on collections.
It is pertinent to note that at no time was the Respondent’s case one of disputing the promotion of the Appellant from the status of an Agent to that of Staff Manager. Their case recognised the fact that the two posts exist in the management and one is a promotion post and higher than the other. In our view, therefore, the learned trial judge could not be right when he held that though the Appellant was promoted to the rank of a Staff Manager he still remained an Agent of the Respondent Company within the spirit and contemplation of Ex. K. PAGE| 7 We would agree with the learned trial Judge’s preliminary analysis that the principal issue in the case was whether the contract of service between the parties was determinable by a week’s notice.
We cannot agree with his conclusion however that in the circumstances of this case the agreement stipulating the period of notice to determine the Appellant’s service as an Agent would, without anything specific in that direction, subsist when he has been promoted to another status which is obviously higher and which on the admission of the Respondent/Company is a promotion post. We cannot agree also that the Appellant, after his promotion to the higher status of Staff Manager, with agents under him (see Exhibit ‘H’) would still be an Agent in the context the word was used in Exhibits ‘A’ and ‘K’.
That being the case therefore, and having regard to the foregoing, it is our view that to terminate the appointment of the Appellant a reasonable notice must be given to him.” Having held that the termination was wrongful, the Court of Appeal then proceeded to determine the amount of the special damages payable to him.
Four grounds of appeal were argued before us, two of which by leave of Court were allowed to be argued as additional to the two grounds filed with the notice of appeal. The gravamen of the argument against the judgment of the Western State Court of Appeal is that Exs. C & M. did not constitute a contract of service between the appellants and the respondent which superceded the January, 1965, Agency Agreement between the parties (Ex. K).
In considering this complaint, we wish to refer to the two exhibits, that is, Exs. C & M. in chronological order. Ex. M is titled “MANAGEMENT MEMORANDUM, SUBJECT:- STAFF MANAGERS’ COMPENSATION FOR FISCAL YEAR 1966. This memorandum set out management suggestions on basic pay which would continue to be weekly for the fiscal year 1966. It also provides for payment of extra compensation and the basis of its calculation. Under the head of “Termination”, the Company specifically set out that the new suggested basic pay and the extra compensation set out in the memorandum were to the fiscal year 1966 only.
PAGE| 8 Ex. C is entitled “MANAGEMENT MEMORANDUM SUBJECT:- Staff Managers compensation for fiscal year 1967.”
This exhibit, like the previous one for fiscal year 1966, sets out basic pay which, instead of being based on weekly premium and ordinary collection commission, provided for extra compensation based on proportional commission to be earned on premiums obtained on Insurance Policies issued during the fiscal year. Such added compensation was to be for a particular fiscal year. The two exhibits did not alter the periods of payment, which remained governed by Ex K, which is to be weekly. A careful comparison of Ex. K with Exs. C & M. shows that the latter two exhibits did not create a novation. The Agents Agreement (Ex. K) remained current and Exs C & M, apart from being management memoranda or circulars dealing with extra compensation to be computed in a certain manner, did not affect the agreement of service Ex. K. In Ex K, although the period of its currency was not stipulated, there was the binding provision, agreed to by appellants and respondent, that either side could give a week’s notice of termination of the service agreement.
In the circumstances, we are satisfied that the Western State Court of Appeal was clearly in error in holding that Exs C & M had superseded Exhibit K and that the period of termination, that is, a week’s notice or payment of a week’s salary in lieu thereof, was no longer binding on the parties. We agree with the learned trial judge that Exhibit K was the subsisting contract of service between the parties and that Exhibit B was a valid notice of termination of the appointment of the respondent. In the result, the appeal succeeds and it is allowed.
The judgment of the Western State Court of Appeal in Suit CAW/88/70 with its award of costs is hereby set aside. The judgment of Ayoola, J., in Suit No.I/104/68 delivered on 2/2/70 with the costs awarded to the appellant is hereby restored. The appellants are hereby awarded costs assessed at 110 Naira in the Western State Court of Appeal and 124 Naira in this court against the respondent.
Other Citation: (1974) LCN/1972(SC)
