Case Review is a publication by the Litigation and ADR Department of Perchstone & Graeys, a leading commercial law firm based in Lagos. The publication analyzes decisions of the Supreme Court and Court of Appeal on various aspects of the Law as they impact on contemporary issues.
A review of the decision in JOSEPH AKINOLA & 2 OTHERS V. LAFARGE CEMENT WAPCO NIGERIA PLC
The dispute between the parties, and leading to this Judgment can be briefly summarized thus; the 3 named plaintiffs/appellants whose action was filed on behalf of themselves and representative of the interests of over 1,400 disengaged employees of the Lafarge Cement Wapco Nigeria Plc (also referred to as ‘the Company’ or ‘WAPCO’) contend that the Company was bound to honour a stated/particular pay obligation contingent upon their voluntary retirement!
It all started sometime in December 1998 when WAPCO’s erstwhile Managing Director(MD), Engineer Joseph Makoju addressed the entire workforce of the Company on the intended redundancy exercise to be carried out by the Company. The reason given for the redundancy exercise was that the Company planned to build a new plant at Ewekoro, Ogun State which plant would require a lot of funds and as a result, the workforce of the Company had to be down sized. The redundancy exercise was be in two phases. The 1st phase would involve those who opted for voluntary retirement while the 2nd phase would affect those the Company would retire compulsorily. The MD further stated that those who opted for the 1st phase would get amongst other benefits, 36 months basic salaries pay as an incentive to encourage them to choose the option of voluntary retirement.
The Plaintiffs and those they represent by the nature of their contract of employment with the Company were not entitled to gratuity, hence their acceptance of the voluntary disengagement option on the terms stated above. The Plaintiffs subsequently filed and returned the voluntary disengagement forms sent through their various departmental heads to the management of the Company. The Company however vide letter dated January 27, 1999 to the Plaintiffs altered/changed its offer of 36 months basic salaries to 12 months basic salaries. Thus, the Plaintiffs were paid the 12 months basic salaries only through the Company’s letter of February 10, 1999.
The Plaintiffs thereafter demanded payment of their balance of 24 months basic salaries earlier on promised by the Company. It was the Company’’s refusal to honour its promise to pay the balance of the 24 months basic salaries that gave rise to this Court action at the High Court of Lagos State where the Plaintiffs essentially claimed against the Company the(ir) entitlements to the said balance, an order directing the payment , and an interest on the judgment sum.
At the conclusion of trial proceedings, the lower Court per O. H. Oshodi, J. in its judgment delivered on June 30, 2008 dismissed the Plaintiffs’ claim and found in favour of the Company.
Dissatisfied with the decision of the lower Court, the Plaintiffs (now, Appellants) approached the Court of Appeal, Lagos.
Issues for determination
At the Court of Appeal, the issues were narrowed, and resolved on the following posers:
Whether the mere acceptance by the Appellants of their entitlement (that is 12 months basic salaries and allowances), would bar them from contending that they have been short paid and that the Appellants could therefore be said to have waived their full or remaining entitlements;
Whether from the oral and documentary evidence before the Trial/Lower Court, the Appellants have proved the existence of any legal right that has been breached by the Respondent, or a contract/promise between the Appellants and the Respondent which entitles the Appellants to the payment of the remaining 24 months basic salaries and other allowances under the Voluntary Disengagement Exercise;
Whether the erstwhile Managing Director of the Respondent, Engineer Joseph Makoju is a vital witness whose evidence would have determined the issue in contention in this suit one way or the other and whether the Appellants have established the existence of the promise made to them by Engineer Makoju, which promise the Appellants relied upon.
Decision of the Court
On the first issue, the Court of Appeal identified what the Appellants sought to enforce to be a mere oral contract/promise which was outside the terms and or condition of the Appellants’ service as agreed with the Company, and therefor unenforceable. In the instant case, the Court held that since the Appellants’ claim to payment of outstanding 24 months basic salaries and other allowances was strictly outside the agreed terms of condition of service as to employment and the termination of employment, but based on an extrinsic promise said to have been made by the Company (the existence of which is denied); the proof of its existence and enforceability no doubt, resile on the shoulders of the Appellants.
With regards to the offer/incentive of 36 months pay packet to induce voluntary retirement, the Company contended differently. The Company maintained that it made an offer for 12 months salaries as against the parol/oral offer of 36 months alleged by the Appellants. The Court therefore held that in the absence of any documentary evidence as part of the committal of the Company to such oral contract, since the Appellants readily accepted and collected the 12 months salaries and only thereafter returned to Court to enforce the remaining balance of 24 months salaries orally said to have been promised by the Company; the law places the burden on the Appellants to prove their entitlement to this oral contract.
The Court restated the position of the law that what is enforceable before the Court is express terms of the contract and that there is none from the records before the Court in the instant case. Also, where there are no express terms, the law looks for implied terms. Again, the Court held that there is nothing from the records to show the implied terms of the contract to move the trial Court to its enforceability.
The Court further held the Appellants bound to their pleadings (that is, the court papers filed to assert their claim) and that since the pleadings did not contain any clear stipulation as to their contract of service, they cannot complain that they were wrongfully terminated or ask for any entitlement outside of it or that which they had failed to plead.
Following from the above, the Court affirmed the finding of the lower Court as correct, that the terms and conditions of service of the Company and the Appellants in the event of voluntary disengagement as contained in the documentary evidence before the Court cannot be varied. In other words, oral or extrinsic evidence cannot be accepted to vary the said documentary evidence.
With regard to the second and third issues, the Court held that since the resolution of the first issue is anchored on the established legal principle that the only situation where a party to a contract of employment can successfully seek remedy in a Court of law is where the terms of employment are breached; the second and third issues have been reduced to mere hypothetical or academic question. Neither of the two issues are connected or even remotely connected to the terms of contract between the Appellants’ employment and the Company. Therefore in affirming the judgment of the lower Court and dismissing the appeal as lacking in merit, the Court held that to proceed to consider the arguments proffered on the other two issues, will serve no useful purpose to the appeal.
The factual situation presented in this case no doubt, turns on a consideration of both the principles of contract and employment law.
There was a contract of employment between the Company and the Plaintiffs (that is, the over 1400 disengaged employees). There is no gainsaying the fact that the world of work can be unfairly/unevenly balanced as between the employer and its employee, especially where the former decides to reduce its workforce. More often than not, it is commonplace to find the Company in such instance resorting to unfair labour practices all in a bid to get rid of its excess labour. The facts of the case under review, at first blush, would almost readily invoke a sympathetic consideration for the disengaged workers. An employer intended to expand its business and yet save more funds by targeting the rationalization of its staff. The employer, it is alleged, made an oral promise that those going on voluntary retirement will receive a compensation of their salaries for 36 months. After the Appellants accepted the offer and submitted their forms for voluntary retirement, the Company changed its position. The Appellants were offered 12 months salaries in lieu of that retirement. Although the appellants collected the 12 months salaries, this action , it is claimed, is premised on the balance of the 24 months salaries on the parol contract between the parties.
Thus, in the absence of facts to the contrary, the reader or unbiased umpire may readily draw the inference that indeed the Company made the offer of 36 months pay packet/remunerations to induce en masse voluntary retirement. But sentiments, however well-founded, would not yield in place of law. Adversarial litigation is predicated on facts, or evidence led in proof of allegations or claim filed in court. This was evidently lacking in the instant case.
Yes, the said ‘contract’ or variation of terms of employment with regards to voluntary retirement was allegedly made vide oral promise. Is this enough to bind the Company? Should a Court of equity allow the Company to alter its position having given a representation that it would compensate the voluntary retirees with 36 months salaries. In other words, since parol contract is one of the acceptable types of contract, is it not possible for the Appellants to claim damages against the Respondent for misrepresentation?
Furthermore, granted that the Court’s finding that the contract between the Company and the Appellants in the instant case is a contract of employment which is governed by its own terms outside of the general terms or rules of contract, it is curious to note that the documentary exhibits which the Court of Appeal relied upon in upholding the finding of the lower Court that the Appellants were entitled to 12 months salaries as against 36 months salaries, do not form part of the original terms of the Appellants’ contract with the Respondent. In other words, if the Court could admit and rely on documentary exhibits which do not form part of the original terms of the Appellants’ contract with the Respondent, why would the same Court not find in favour of the oral evidence that the contract between the Respondent and the Appellants was indeed beyond the two exhibits relied upon. There are indeed exceptions to the general rule of law that when a transaction has been reduced into writing by the agreement of the parties, extrinsic evidence is inadmissible to contradict or as in this case, vary, add to or subtract from the terms of the document. One of such exceptions is the existence of any separate oral agreement as to any matter on which a document is silent, and which is not inconsistent with its terms, if from the circumstances of the case the court infers that the parties did not intend the document to be a complete and final statement of the whole of the transaction between them. Section 128 (1)(b) of the Evidence Act 2011.
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