Agholor V Cheesebrough Pond's (Zambia) Limited ((1976) Z.R. 1 (H.C.)) [1976] ZMHC 6 (8 January 1976)

AGHOLOR v CHEESEBROUGH POND'S (ZAMBIA) LIMITED (1976) Z. R. 1 (H. C.) HIGH COURT CULLINAN, J. 8TH JANUARY, 1976 NO. 1973/HP/909 5 Flynote Contract - Master and servant - Employee holding himself out as being skilled - Implied undertaking that he will exercise reasonable skill or competence - Failure to display such skill or competence - Liability to be dismissed. - Contract - Master and servant - Incompetence - Condonation by employer - Whether it can be relied upon as ground for dismissal. Contract - Master and servant - Termination of employment - Right of master to terminate at any time for any reason - Liability in damages in case of breach of contract. Contract - Master and servant - Dismissal - Meaning of - Effect - Letter of termination - Whether it is necessary to allege any incidence of misconduct, negligence or incompetence - Absence of such allegation in this case - Inference. Contract - Master and sergeant - Implied right to terminate on notice - Employee on probation - Whether he can expect same notice as one confirmed - Securing of new employment by employee within period of reasonable notice - Effect on damages. Headnote The plaintiff, a Chartered Secretary and Cost Accountant, was appointed as Company Secretary/Controller of the defendant company, a subsidiary of an international group. A letter containing confirmation of a verbal offer of appointment addressed to a recruiting agency for executives in the United Kingdom set out the terms offered to the plaintiff. The plaintiff who resided in Edinburgh accepted those terms. He commenced duties in Lusaka on the 27th of August, 1973. No formal contract of employment was ever signed. On the 18th of September, 1973, the plaintiff's employment was terminated. The plaintiff claimed damages for wrongful dismissal. The defendant took up the position (a) that the contract was properly terminated and (b) alternatively, that the plaintiff was lawfully dismissed on the grounds of incompetence and misconduct. It is well settled that the employee who holds himself out as being skilled to do a Held: (i) certain type of work impliedly undertakes that he will exercise reasonable skill or competence in that work. He can be dismissed summarily if he fails to display such skill or competence. p2 It is trite law that a master can terminate a contract of employment at any time, (ii) When incompetence has been condoned by an employer it cannot be relied upon as a ground for dismissal. (iii) even with immediate effect and for any reason. If he terminates outside the provisions of the contract then he is in breach thereof and is liable in damages for breach of contract. (iv) Where a master "dismisses" a servant he terminates the contract summarily without any notice, on the grounds of misconduct, negligence or incompetence. If such grounds are justified the servant forfeits the right to any notice whatsoever and a number of other benefits. (v) While an employer need not allege any incidence of misconduct, negligence or incompetence in dismissing an employee, provided such a ground exists, the absence of any such ground in the letter of termination in this case does support the proposition that the letter was not one of dismissal. Dismissal invariably incurs loss of benefits other than those already earned under the contract. (vi) termination of employment as one confirmed in his appointment. (vii) notice. (viii) The securing of new employment by an employee within the period of reasonable notice determined by the court will have the effect of minimising damages. In every pure master and servant contract there is an implied right to terminate on Generally speaking an employee on probation cannot expect the same notice on Cases cited: (1) Ward v Barclay Perkins & Co. (1939) 1 All E. R. 287. (2) (3) (4) Mulholland v Beswell Estates (1950) 2 LXVI, T. L. R. 764. Davidson v Namboard 1972/HP/249 (unreported). Zandamela v Kafue Township Council 1974/HP/728 (unreported). For the plaintiff: For the defendant: M. A. Hazier. S. S. Zulu. ____________________________________ Judgment CULLINAN, J.: The plaintiff's claim is for damages for wrongful dismissal. The plaintiff, a Chartered Secretary and Cost Accountant, was appointed as Company Secretary/Controller of the defendant company, a subsidiary of an international group. The letter containing confirmation of a verbal offer of appointment addressed to a recruiting agency for executives in the United Kingdom, reads in part as follows: "(1) (2) An unfurnished flat or house will be provided free of charge. Commencing salary will be K8,000 per annum. (3) A company car will be provided and all running costs will be paid by the company. p3 (4) The position carries with it participation in an Incentive Plan which pays between 0 and 20% of annual salary depending on performance. (5) All moving expenses for family and furniture and effects will be paid by the company (6) Our offer is subject to the issue of a work permit by the Zambian Government. This will be applied for by us as soon as Mr Agholor indicates his acceptance of the position, but naturally, we cannot guarantee that the permit will be issued. In addition to the above, during my interview with Mr Agholor, I mentioned to him that: (a) Leave will be four weeks per annum. (b) Membership of our contributory pension plan is compulsory. The employee's contribution is 5% of salary. (c) Membership of our medical aid plan is compulsory. (d) Initially, he will report to the present, Company Secretary. This arrangement will continue until we are completely satisfied that he is ready to assume full responsibility for the position." The plaintiff who resided in Edinburgh accepted those terms. He commenced duties in Lusaka on 27th August, 1973. No formal contract of employment was ever signed. The plaintiff's and defendant's account of what followed diver in a number of aspects. On the issue of credibility I found the plaintiff to be an evasive witness. The defendant's witnesses were not shaken in cross-examination and I have no reason to doubt their evidence. The General Manager, Sir Culverwell, testified that he had arranged with the Financial Director for the Group's African Division, a Mr Rolzhausen, to secure the attendance of two of the Company's Area Accountants, Mr Freeburn, the Area Accountant for West, East and Central Africa, from Nigeria and Mr Clark from Malawi, to assist the plaintiff on his arrival. Mr Culverwell saw Messrs Freeburn and Clark in the plaintiff's office "going through various files and Company' accounting procedures". A Mr Dunleavy, an accountant from the firm of Deloitte and Company who audited the Company's books was also there to give assistance and spent approximately a couple of hours on three or four occasions in the week. Mr Freeburn stayed four days and Mr Clark stayed some two and a half weeks. Mr Culverwell estimated it would take one and a half weeks to take over the post, there being no outgoing Company Secretary present to hand over. Mr Culverwell had occasion to doubt the plaintiff's competence when on 5th September he asked the latter to compute two weeks' salary for an employee leaving the service of the Company who was employed on a monthly basis. The plaintiff testified that he estimated the weekly salary by dividing the monthly salary by four. Three witnesses, a Chartered Accountant, Mr Culverwell and a Bookeeper testified that such procedure resulted in an overpayment, the correct procedure being to multiply the monthly salary by twelve and thereafter to divide by fifty-two. For p4 my part I cannot appreciate how the plaintiff, a Cost Accountant, could possibly maintain that his was the correct procedure. Furthermore Mr Culverwell testified that when the plaintiff brought the paysheet to him first, when he noted the incorrect calculation, he also noted that the plaintiff had failed to deduct tax; he instructed the plaintiff to re- calculate the salary. The Bookeeper however, a Mrs Meyer, testified that the plaintiff said to her "he didn't understand the way in which Mr Culverwell wished him to pay out Mrs Burley and instructed me to do so". Mrs Meyer did so. Indeed she testified that "the daily file of work handed to him he used to hand over to me". On the 12th September Mr Rolzhausen arrived in Lusaka. The following day he met the plaintiff in the office. The latter happened, to have the cash book open in front of him and Mr Rolzhausen queried a specific item on the Bank Reconciliation Statement; the plaintiff's answer was unintelligible. Mr Rolzhausen then queried an item of receipt not reflected in the bank statement: he got no satisfactory answer. This no doubt put Mr Rolzhausen on inquiry. When asked to give the annual depreciation over ten years on an item valued K10,000 the plaintiff after explaining that he was not versed in Zambian currency, and after the use of pen and paper, gave the answer as K2,000. Generally Mr Rolzhausen described the plaintiff's performance as an effort "to beat about the bush when asked questions". As a result Mr Culverwell interviewed the plaintiff on 14th September in the presence of Mr Rolzhausen. The latter informed the plaintiff he "didn't consider he could do the job and his relationship should be terminated with the Company". The plaintiff said he thought this was unfair in view of the short time he had been with the Company and expressed a desire to speak to the Area Vice - President Mr Gerry who had interviewed the plaintiff in the United Kingdom in January, and who apparently was then in Lusaka. The interview was arranged that afternoon, with Messrs Rolzhausen and Culverwell also present. The plaintiff reiterated that he considered that the latter were both being unfair. "He asked for one week more to prove to himself and us he could do the job" said Mr Rolzhausen. Mr Gerry asked if one week was sufficient and the plaintiff indicated that it was. Mr Gerry agreed to the plaintiff's request and stated that Mr Clark would remain in Zambia for that week to assist the plaintiff. Mr Rolzhausen departed on 15th September, having recommended the plaintiff's dismissal. On that date Mr Culverwell overheard the plaintiff in his office speaking to his predecessor a Mr Richardson, whose services had been terminated on payment of one month's salary in lieu of notice; the plaintiff requested the latter to visit him at his house so as to assist him with the books. Mr Culverwell entered the office and cautioned the plaintiff not to take any Company books to his home and advised him it would be improper to seek the assistance of or show Company records to Mr Richardson. On the morning of Monday, 18th September, Mr Culverwell entered the plaintiff's office seeking a particular record. The plaintiff informed him he had taken it home over the weekend. Mr Culverwell p5 was annoyed. The records including a salaries register were fetched from the plaintiff's house. One journal voucher dated 25th August, 1973, that is after the departure of Mr Richardson from the Company, which had been completed by Mr Dunleavy bore an endorsement in the handwriting of Mr Richardson. When challenged on the point the plaintiff remained Silent. Later that day Mr Culverwell came across a telex message from the recruiting agency in the United Kingdom whose services the plaintiff had employed. The telex was an answer to the one sent by the plaintiff himself on Friday, 15th September, seeking another position "anywhere in the world" as the plaintiff himself put it. It was then that Mr Culverwell decided to terminate the plaintiff's services. On the same day he addressed the following letter to the plaintiff: "Dear Mr Agholor, I refer to our conversation regarding your position with the above Company and wish to confirm the following: The air fare for you and your wife's return to Scotland will be provided by the Your service will be terminated with immediate effect. You will be paid your salary for the month of September, 1973, plus an additional (1) (2) month's salary in lieu of notice. (3) above company. (4) paid for on arrival by the above company. In addition, these goods will be repatriated at the above company's expense. (5) arrangements for your return to Scotland have been finalised by the above company. Freight and other related charges on your personal effects now in transit will be You will be permitted to remain in the company's house until such time as In conclusion we wish you well for the future." It is well settled that the employee who holds himself out as being skilled to do a certain type of work impliedly undertakes that he will exercise reasonable skill or competence in that work. He can be dismissed summarily if he fails to display such skill or competence. I accept the defendant's evidence as to the plaintiff's performance. The plaintiff himself did not, despite his qualifications, engender in the Court any confidence in his competency when he testified that "it takes five to six months to prepare accounts for trial balance" - this despite Mr Rolzhausen's evidence which indicates that striking a trial balance was a Company monthly accounting procedure. Mr Rolzhausen, who holds a B. Sc. Degree from an American University with a Major in Accountancy, testified that a student would be given some fifty minutes in an examination to complete a trial balance, with journal balances provided. He reckoned it would take a day to strike a trial balance, maybe two days if at first it didn't balance. He himself had completed the Group Headquarters' trial balance in three hours. When questioned by the Court as to how long p6 it would take to strike a trial balance with all the Company's books previously balanced, the plaintiff an estimate of two to three weeks; in other words it would take as much as three weeks to complete only one item of procedures which are reserved to the end of the month. Nonetheless it was agreed between the parties that the plaintiff should have another week in which it could be ultimately decided whether or not he was competent. To that extent his incompetency in the particular post was condoned. As I see it the plaintiff was therefore precluded from dismissing the plaintiff for incompetency within that week. As to taking the Company's records home on the weekend, despite instructions to the contrary, I cannot see that that would constitute misconduct sufficient to warrant dismissal. I am satisfied on the evidence that the only reasonable inference is that Mr Richardson did assist the plaintiff with the books over the weekend despite specific instructions to the contrary. In the particular circumstances, however, bearing ire mind that it seems no material confidential matters were divulged and that the plaintiff was endeavouring to retain his employment, I am not satisfied that such misconduct was sufficiently grave to warrant dismissal. It seems that what finally prompted termination was the telex message sent by the plaintiff. That fact is not pleaded, nor would it constitute serious misconduct. I do not think the sending of the telex message established that the plaintiff was not sincere in his efforts to retain his employment within the specified week. His conduct in taking the books home is at variance with such aspect. It may be that he hoped for the best but made plans to cover loss of employment. As I see it therefore the only ground for dismissal was incompetence, which was condoned and cannot now be relied upon. The contract of employment, as constituted by the correspondence, omitted two important matters, the duration of the term of service and the period of notice required on termination by either party. The plaintiff testified that he understood the employment to be permanent and pensionable; in support of this, he was obliged to contribute to pension fund. Nonetheless he conceded that, the contract was subject to the issue of a work permit by the authorities, indeed his claim for damages is based apparently on the duration of such permit, that is a period of three years. Initially his work permit, issued on 25th July, 1973, before the commencement of employment, was valid up to 5th January, 1975, to coincide with the period of validity of his passport. The plaintiff had therefore no guarantee that his contract of service would ever extend beyond an initial period of sixteen months; the fact that his work permit was subsequently extended while in the employment of another corporation is irrelevant In any event I do not see that contribution to a pension fund would necessarily establish the permanency of any post (Ward v Barclay Perkins & Co. [1]). Further the written offer of appointment (in sub- paragraph (d)) indicates to me that an initial undetermined probationary period would be served. As I see it therefore the contract was for a period of no more than sixteen months, subject to an undetermined period of p7 probation, the contract renewable thereafter subject to renewal of work permit. I do not see anything in the evidence before me, and it has not been argued otherwise, which would indicate that the contract involved other than a "pure master and servant" relationship. It is trite law that a master can terminate a contract of employment at any time, even with immediate effect, and for any reason. If he terminates outside the provisions of the contract, then he is in breach thereof and is liable in damages for breach of contract. To "dismiss" an employee is altogether a different matter. To speak of a "dismissal with insufficient notice", and I have found a number of cases where this expression is used, to my mind confuses the issue. A master may terminate with or without sufficient notice. In the latter case he is liable for breach of contract. Where however master "dismisses" a servant he terminates the contract summarily without any notice, on the grounds of misconduct, negligence or incompetence. If such grounds are justified the servant forfeits the right to any notice whatsoever, and to a number of other benefits. The plaintiff's claim is for wrongful dismissal as such. The defendant's defence, to say the least of it, seems to confuse the issue, particularly where it speaks of a dismissal as not being summary. Ultimately it seems the defence is twofold: (a) the contract was properly terminated; (b) alternatively the plaintiff was lawfully dismissed on the grounds of incompetence and misconduct. Mr Culverwell and others spoke of the plaintiff being "dismissed" or "fired". It seems to me that the various expressions used by the plaintiff and the witnesses do not resolve the issue; the letter of termination of contract does. It is a matter of fact as to whether or not the plaintiff was dismissed. The word "dismiss" or its derivatives are nowhere to be found in the letter of termination, but that is not the test. It states that "Your service will be terminated with immediate effect", no more than that. In contesting the defendant's reasons for dismissal the learned counsel for the plaintiff points to the fact that the letter gives no ground for dismissal. While an employer need not allege any incidence of misconduct, negligence or incompetence in dismissing an employee, provided such a ground exists the absence of any such ground in the letter does support the proposition that the letter was not one of dismissal. It provided for more than a month's pay in lieu of notice i.e. in respect of the remaining twelve days in September plus the full month of October. Dismissal invariably incurs loss of benefits other than those already earned under the contract. Nonetheless the letter stated that full repatriation expenses including freight would be paid and that the plaintiff would be allowed to gratuitously remain in the company's house until repatriation. Indeed the General Manager went on to wish him well for the future. I cannot by any stretch of imagination interpret that letter, by which the defendant is bound, as constituting a letter of dismissal. I hold therefore that the plaintiff was not p8 dismissed, but that his contract was terminated on payment of salary in lieu of notice. The question of what constitutes reasonable notice arises in the absence of any express term. The plaintiff testified that he would have given six months' notice if he wished to terminate. His use of telex in contacting the employment agency may indicate that he did not expect anything like such notice. In the case of Mulholland v Bexwell Estates [2] Parker, J, observed (at p. 766): "It seems to me that every employee is taken on on trial in the sense that if he does not make good he will have to leave the post ;" Sub-paragraph (d) of the written offer of appointment obviously catered for that contingency. Generally speaking an employee on probation cannot expect the same notice as one confirmed in his appointment. In the case of Davidson v Namboard [3] an expatriate accountant was entitled to three months' notice or one month's salary in lieu. In Zandamela v Kafue Township Council [4] an expatriate, a Chief Health Inspector, was entitled to one month's notice. In the case of Mulholland a period of three months was held to be reasonable notice. Many more authorities are cited in Chitty on Contracts Vol. II 23 Ed. at para. 712 under the headings of e.g. clerks, managers and directors. The plaintiff's claim for salary in lieu of notice itself covers a period of three additional months. Doing the best I can it seems to me that a period of three months would have been a reasonable period of notice. I hold therefore that the plaintiff is entitled to salary up to 31st December, 1973, less deductions. The plaintiff claims K118.72 for out of pocket travelling expenses for himself and his wife en route to Lusaka. He itemised the expenses as being ú17 sterling for rail fares, plus £76 for taxis -a total of £93 which I calculate was then in excess of K118.72. The figure of £76 is quite exorbitant. Not a single receipt such as a train ticket was produced in support of the claim. The General Manager testified that a cheque in the amount of at least K50 had been paid to the plaintiff in respect of travelling expenses. The plaintiff testified that he could not remember if the defendant company gave him "a cheque for incidental expenses . . . They gave my wife K50 for shopping. " On the issue of credibility I have found the plaintiff to be an evasive witness. The onus is on the plaintiff in the matter. I am not satisfied that he incurred the expenses involved and I am not satisfied that he did not receive any payment in respect thereof. That part of the plaintiff's claim is dismissed. The plaintiff claims the sum of K3,077.82 as "moving expenses for family and furniture and effects Britain to Zambia" and a similar amount in respect of the return journey. The plaintiff has also included a claim for air fare in respect of himself and his wife in the amount of K889. The former claim can only refer to freight of furniture. In support thereof the plaintiff has produced an invoice and a receipt from a local removal firm in the amount of K1,144.15. It details inter alia a "transport" charge from Limbe to Lusaka in the amount of K94. The plaintiff was unable to produce a single shipping document. He said he had lost them in moving p9 house. As counsel for the defendant points out he had some fourteen months in which to procure copies thereof. I note that he was able to produce copies, fully endorsed with relevant notes, of all correspondence relevant to his appointment. He could not remember the name of the shipping line or the particular ship; he did not know the weight of the freight involved. He said his furniture was valued some ú8,000 sterling; I would consider that to be an extravagant amount of furniture for an accountant with a reasonably modest salary of ú4,000 sterling per annum in the United Kingdom, owning a three-bedroomed house. Of the balance of K1,933.67 freight charges he estimated he paid ú600 sterling insurance, £300 storage in Edinburgh, £400 storage in Zambia (the invoice produced indicates no charge in respect of item "Storage"), £300 storage in Beira, £80100 handling charges plus shipping charges £1,200. That totals some £2,900 sterling which is well in excess of K3,077.82 much less K1,933.67. Furthermore the invoice discloses an item in the amount of K774.39 15 marked "Scott Packing". The plaintiff had earlier testified that he paid the sum of K1,933.67 to various handling agencies such as Scott Packing. I do not appreciate why the latter firm's charges are then included on the local firm's invoice. The large amount of K774.39 was in respect of "cases etc.", the plaintiff said. The invoice indicates that it was paid in respect of "Seafreight". The onus is on the plaintiff. He must prove his damages. He cannot fire them at the head of the Court unsupported by invoice or receipt. With regard to the additional K1,933.67 I frankly do not believe the plaintiff's testimony. Furthermore, the defendant was obliged under the contract to ship the plaintiff's goods to Lusaka for the purposes of residential service with the Company. Once the contract was terminated he would be obliged to return the plaintiff in status quo ante i.e. to return the plaintiff, his family and his goods to Edinburgh. I do not see that the defendant would be obliged to ship the goods to Lusaka if at the time of termination they had not left Scotland. The defendant offered to pay the freight of those goods in transit. The plaintiff however was obliged to minimise damages. He testified that the goods were shipped in January, 1974, having been stored beforehand, arriving in Lusaka in the same month. This was some four months after termination if not after the issue of the writ in this matter. I note that the invoice produced is dated 11th July, 1974. It is significant that the plaintiff secured other employment in Lusaka on 11th January 1974. When asked why he had not stopped the carriage of his goods he replied "I would still have to pay expenses." As I see it therefore the defendant is not liable for the actual shipping of the plaintiff's goods from the particular Scottish port, as it is quite clear that the plaintiff could quite easily in the time available have stopped such shipping. Further, the plaintiff has not produced a single document to establish that he had incurred any expenses such as packing, freight to the port, storage and insurance before the date of the termination of the contract, or so soon thereafter as to be unavoidable. Neither did the plaintiff volunteer any evidence thereon. If he can produce any documentary evidence of such unavoidable expense then the defendant would be liable therefore- p10 and the expenses of the return journey from the warehouse to the plaintiff's home in Edinburgh. In this respect I grant the parties liberty to apply in chambers. The plaintiff has claimed an air fare for himself and his wife to Scotland in the amount of K889. He cannot expect to enrich himself from the contract: such sum is only payable on proof that he has incurred the expense i.e. in the least he has booked the passage. I do not consider that an offer to repatriate can remain open indefinitely. It seems to me that a reasonable period would be three months from termination. In view of the period of litigation in this matter I hold that the plaintiff is entitled to such air passage on proof that he avails of such within 90 days from the date of this judgment. In this respect I grant the parties liberty to apply in chambers. The plaintiff has claimed in respect of benefits arising out of the loss of free housing and a free car supplied by the defendant and also the difference between his present salary and that paid by the defendant over a period of three years. The three claims total K10,966. The claims are based on the proposition that if the employer terminates before the end of the term of service he is liable for all benefits accruing thereafter-and this despite the fact that the employee ceases to render any consideration therefore, i.e. to work. None of the claims are sustainable in law. In every pure master and servant contract there is the implied right to terminate on notice. If an employer gives due notice then the employee is required to work out the period of notice during which time of course other benefits accrue. If the employer chooses to pay salary in lieu of notice the contract is immediately at an end, the loss of benefits over the period of notice being offset by the fact that the employee performs no work during that period. After the expiration of such period of notice or after payment of salary in lieu of notice, apart from other benefits already accrued, it is of no concern to the employer that the employee encounters less attractive conditions in new employment. On the contrary the securing of new employment within the period of reasonable notice determined by the court will have the erect of minimising damages. To my mind the plaintiff's claims under all three heads are little short of preposterous and they are accordingly dismissed. The defendant counterclaims in respect of the plaintiff's occupation of a company house. The defendant pays a rent of K400 per month in respect thereof. During the plaintiff's occupation after termination the defendant company was obliged to accommodate another employee in a hotel. The defendant offered to accommodate the plaintiff in the house until such time as he was repatriated. That to my mind was an offer to return the plaintiff in statu quo ante i.e. without involving him in any extra expense. When the plaintiff issued a writ on 27th September, 1973, he rejected the offer of housing pending repatriation. As I see it, having terminated the contract, on payment of salary in lieu of notice, the defendant was not obliged to house the plaintiff any later than a period within which he could repatriate him. The issue of the writ ended all such p11 considerations and also the liability for housing. I hold therefore that the plaintiff is indebted to the defendant for housing from 27th September, 1973, to 6th February, 1974, when possession was delivered up at the rate of K400 per month. I calculate the amount involved to be K1,700 approximately and I give judgment to the defendant in that amount. I give judgment to the plaintiff in respect of the payment of salary in lieu of notice in the amount of K2,666.68 less statutory and other deductions. Judgment for plaintiff