L.A. Morakinyo V. Ibadan City Council (1964)

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BRETT,J.S.C.

The appellant was employed by the Ibadan District Council and its predecessors in function from 1931 to 1958, and retired as a Clerk, Scale Ill.

Retiring benefits consisting of a gratuity of £392-12s-1d and a pension of £94-4s-6d a year were granted to him by the Council, but the Council claimed to be entitled to withhold payment as a set-off against the sum of £499-13s-10d in respect of loss of stores for which it held him responsible, and wrote to his bondsman demanding payment of E107-1s-9d being the difference between £499-13s-10d and the gratuity of £392-12s-1d.

He brought the present action in the Chief Magistrate’s Court, Ibadan, claiming the sum of £478-18s-6d made up of the gratuity and of monthly instalments of his pension up to the date of his commencing proceedings. He failed before the Chief Magistrate and in the High Court, and has now appealed to this Court.

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The Council submits, however, that the right to retiring benefits cannot be enforced in a court of law, and this submission was accepted by the Courts below. The Chief Magistrate relied primarily on two decisions of the House of Lords, of which one, Egan v. Attorney-General [1931] A.C. 113, turned on the construction of Orders made under the Constabulary and Police (Ireland) Act, 1919, and the other, Nixon v. Attorney- General [1931] A.C. 184, on the constitutional position of civil servants of the Crown. A District Council does not enjoy the privileges of the Crown in litigation or in its relation with its employees, and neither decision is applicable in this case.

In the High Court the learned Chief Justice considered regulations 7 and 17 of the Local Government Staff (Retirement Benefits) Regulations, and interpreted them in the light of the decisions of the House of Lords in Considine v. McInerney [1916] 2 A.C. 162, and Nixon v. Attorney-General, supra, each of which concerned the rights of a civil servant of the Crown, and of that of Asquith, J., in Holloway v. Popular Corporation [1940] 1 K.B. 173.

The last-mentioned case does concern the rights of an employee of a Borough Council, but it turned on the interpretation of a single section of a local Act of which we do not regard the wording, as cited in the report, as being fairly comparable with the wording of the relevant provisions in this case, taken as a whole.

Section 109 of the Local Government Law lays down that ‘the Governor in Council may by regulation make provision with respect to the pensions and gratuities which are to be paid whether as of right or otherwise-(a)… (b) to other persons who have been employees of a council or councils.” The regulations made under this authority are the Local Government Staff (Retirement Benefits) Regulations, and regulation 32, on which the Council relies, provides that “nothing in these regulations shall be construed as conferring a right to a pension or to a gratuity or to an ex gratia allowance as compensation for past service.” The question arises whether ‘a right to a pension’ means “a right to be granted a pension” or “a right to receive a pension once it has been granted.”

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In our view the context shows that the phrase bears the first meaning. Regulation 7 lays down that a council official may, in stated circumstances, be granted a pension; regulations 13, 15, 17 and 22 lay down when and to whom gratuities may be granted; regulation 29 lays down that Councils may grant ex gratia allowances.

Regulation 32 seems intended to make it clear that these provisions are permissive and not obligatory as a matter of law. As regards the payment of pension once granted, regulation 12 empowers a council to direct that a pension shall cease on the conviction of an ex-official, but the proviso to the regulation makes it obligatory to restore the pension with retrospective effect if the ex-official receives a free pardon.

It is significant that the grant of a pension requires the approval of the Permanent Secretary to the Ministry of Local Government, whereas regulation 12 contains the only provision for the discontinuance of a pension. It would be inconsistent with the general pattern of ministerial control if a council could withhold a pension at its own pleasure after the grant had been approved.

The wording of regulation 32 itself leads to the same conclusion. It does not purport to take away any rights, but merely to make it clear that certain rights are not being conferred, and this disclaimer Is more appropriately applied to a right to be granted a pension, which could only arise under the regulations, than to a right to receive a pension once granted, which, for reasons which we shall state, arises as a matter of law from the relationship between the Council and its employees.

We therefore find nothing either in the Local Government Law or in the regulations to indicate that the appellant has not a legal right to receive his gratuity and pension, but it is important to consider what the nature of the right is, in view of the form of this action and of the limits to the classes of action which a Chief Magistrate has jurisdiction to entertain. The Council has submitted that a declaratory judgement would in any event be the only legal remedy available, and the Chief Magistrate has admittedly no jurisdiction to grant either a declaratory judgement or an order of mandamus, neither or which has been asked for. In our view the obligation is contractual. In a contract of service such as that between a local government council and its employees there may be many benefits, of which promotion is the most obvious one, which the employer is not obliged to grant in the first place, but which he cannot discontinue without good cause when once he has granted them. The Council relied on the decision of the Court of Exchequer Chamber in Merchant v. Lee Conservancy Board (1874) L.R. 9 Ex. 60 for the absence of any contractual bar to the reduction of a pension once granted, but the local Act from which the trustees in that case derived their powers, as cited in the

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report, was obviously only permissive, and there is nothing to suggest that the Act contained anything to correspond to the elaborate provisions of the Local Government Law and the regulations made under it for the appointment, discipline and retiring benefits of employees. It seems clear that in that case the trustees had a general discretion with regard to the grant and quantum of retiring benefits, which they had exercised ad hoc in making the original grant, so that it could fairly be said that ‘the resolution” (granting the annuity) “conferred a mere bounty on the plaintiff; the elements of a contract are entirely wanting”. In Western Nigeria the Letter of Appointment and the Declaration and Form of Agreement in Appendices B1 and B2 to the Local Government {Staff) Regulations only refer to those regulations as part of the terms of service, but those regulations obviously do not contain the whole of the terms of service, since some are contained in the Local Government Law, and some arise by necessary implication, such as the Council’s obligation to pay its employees their salaries.

We do not hesitate to hold that the Retirement Benefits Regulations also form part of the terms of service and that once a pension is granted it is part of the implied contractual obligations of the Council to pay it. It would be inconsistent with the basis of good faith on which the service of a council’s employees rests to regard a pension earned and granted as “a mere bounty”.

The action brought in the Chief Magistrate’s Court was therefore one which he had the power to entertain, and the appeal must be allowed. Judgement is entered for the plaintiff for the sum of £478-18-64 as claimed. The appellant must have his costs in all three Courts, which we estimate at a total sum of 150 guineas.

Other Citation: (1964) LCN/1125(SC)