General Insurance Company of Seychelles v Bonte (SCA 6 of 1994) [1995] SCCA 12 (16 June 1995)

IN THE SEYCHELLES COURT OF APPEAL CIVIL APPEAL NO. 6 OF 1994 GENERAL INSURANCE CO. OF SEYCHELLES LTD. APPELLANT v. DANIEL BONTE RESPONDENT Before : Silungwe, Ayoola & Adam JJA Mr. Pardiwalla for the Appellant Mr. Boulle for the Respondent JUDGMENT OF ADAM, J. A. The Appellant was given leave by this Court to call further evidence as it was felt that exhibit P4 - the letter of November 9th 1981 - may not necessarily constitute a contract for future services, but as that exhibit formed the basis of the findings of the learned trial Judge, further evidence which seeks to shed light on that exhibit would probably have an influence on the result of the appeal. The that he is Respondent in his Plaint averred in paragraph 1 and was at all material times a Director of the Appellant; in paragraph 2 that by way of various agreements with the Appellant received director's fees £8000 in 1978 and £10000 in 1979 and 1980 plus bonuses; in paragraph 3 that it was agreed in 1981 that the remuneration shall be £7500 per annum effective November 1st 1981; in paragraph 4 that he was paid that remuneration up to December 31st 1982 and thereafter the Appellant ceased all remuneration payments; in paragraph 5 as a result of the breach of contract the Appellant is indebted to the Respondent in the amount of SR.700,000 for remunerations due for the period 1983 to 1992 and SR.10,000 for moral damages and in paragraph 6 that a • -2- despite a mise en demeure made on August 17th 1992 the Appellant failed to pay. In its Defence the Appellant admits paragraph 1 of the Plaint and averred that the Respondent was only a nominal director; that it denies the Respondent received director's fees but only received a monthly salary during his employment with the Appellant, that it denies that remuneration of L7500 per annum shall be paid from November 1st 1982 but that whatever was received was by way of salary during his employment, that it denies a breach of contract and being tat indebted to the Respondent but the Respondent received his employment salary up to December 31st 1982 only when his employment ceased due to an Act of God since the legislation put an end to all insurance business but the Respondent with his own consent stayed on as a nominal director only in order to satisfy company regulations; that the Respondent was well aware of this and had acquiesced; that it denies that despite a mise en demeure it failed to pay and that such mise en demeure was itself out of time and asked that the claim be dismissed as it was time barred and that matters relating to employment have been removed from the jurisdiction of the courts by virtue of the Employment Act, 1990. of August The Respondent was awarded SR.280,500 and moral damages of SR.10,000 by Perera J., who held that exhibit P2 - showing memorandum Appellant's Respondent's salary for 1978 to 1980 - confirmed that he was paid a salary, that he left in September 1981 to live in payment he received of L625 was in 1982, that on March 23rd 1984 the Britain, that the last Britain on October 7th Chairman treated him as a director and requested Appellant's him to sign company documents and that on August 17th 1984 he also asked him to sign a company resolution in his capacity 19th as a director. -3- The Respondent's claim was based on a "To whom it may concern" letter of November 9th 1981 (exhibit P4) signed by the Appelant's General Manager. It was by this letter, Perera J. held, the Appellant agreed to pay L7500 per annum as remuneration to the Respondent for future services as a director. But he rejected the evidence of the Appellant's Chairman that this was one year's severance payment. He held that, as for the Court's lack of jurisdiction in terms of the Employment Act, 1990, it did not apply to Respondent. Also, he was unable to accept that the the Respondent continued to hold the dual position of director a and bonus. because of Act of of ±7500 no God nominal director. to him, hence Perera J. held he had received Seychelles so he should The Appellant asserted business was terminated which the Respondent's employment Further, in the November 1981 agreement of distinction had been made between Previously in 1979 and 1980 more and employee. the payment salary, fees had been paid reduced remuneration when he left thatbasis. entitled to payment on legislation insurance that due to from November 1982, from but he continued on his own ceased Perera J. held that the consent as Appellant therefore impliedly submitted that since January without directorship decided only after arriving in remuneration and that he Perera J. therefore said he Seychelles to had to ascertain As for the whether prescription had been interrupted. assertion that by not replying to 12, 1992 this constituted a first mise that he agreed with the Appellant's waiver, Perera counsel that there must be positive declaration or a positive overt act to interrupt But he the Appellant in its Defence admitted that the observed that nominal Respondent and was a director, although a make his• claim. en demeure of prescription. Respondent's extinctive Respondent held held May the the is J. director. the Appellant's director and He found that documentary evidence disclosed that being used even in 1984 as a services were that the Appellant is still in operation. In 4. -4- when the Respondent was in Seychelles he was given free accommodation at Vista Do Mar on the basis of company policy in respect of directors. The Chairman of the Appellant reiterated that the Respondent functioned as a nominal director. Perera J. held that in this context the defence of Act of God was inconsistent with the Chairman's evidence. He said that the legislation with effect from November 1982 only affected the Respondent partially. He found that the Respondent's rights through directorship were quite separate from his rights as employee. Hence, he held, relying on documentary and oral evidence there was and is a continuous contract between them and so the Respondent was entitled to remuneration of £7500 per annum. But as there was no waiver of prescription the Respondent could only be given five years payment. Since he held that the Respondent would have suffered pain of mind due to the behaviour of an ungrateful employer, Perera J. awarded SR.10,000 as moral damages. the Memorandum of Appeal the Appellant's grounds In were that although there had been no waiver of prescription, he was wrong not to have given full effect to the plea of prescription; that the the learned Judge was correct to hold right of action only arose or accrued one year after December In terms of Article 2271 of the Civil Code of 31, Seychelles such right of action was prescribed after 5 years 1982. which would longer be exercised. continuing contract remuneration. since Article only interest to hold that the have been after January 1, 1989 when it could no He was wrong to hold that there was a for future services and allowed 5 year's He was wrong to have awarded moral damages Code of Seychelles applied and so He was wrong was due from the day of demand. the Defence of Act of God was not available to and not the Appellant as the against claim Civil was it Appellant's existence from the Appellant. subsidiaries which have a He was wrong to hold that separate legal -5- section 4(3) of the Employment Act, 1990 did not apply and to rely on exhibit P4 as confirmation of an alleged agreement by the Appellant to pay £7500 to the Respondent as remuneration for services as Director. He was wrong to rely on Exhibit P10 as proof that the Appellant continued in existence for the purpose of this. Further an analysis of exhibit P10 would have shown that the Appellant was not a Director of the Appellant since 1983. He was wrong to come to the conclusion that some one could not hold the position of Director th in name only without remuneration and/ at conclusion furthermore was not supported by evidence. evidence In view of the adduced he was wrong to come to the conclusion that the Respondent had reduced his remuneration when he decided to leave Seychelles and that he failed to place reliance on the contents of the mise en demeure of May 12, 1992 and the evidence fee. Appellant Director. of the Appellant's Chairman regarding director's He was wrong to come to the conclusion that the in its Defence admitted the Respondent is and was a In the Notice of Cross-Appeal the Respondent that the judgment be varied by finding that he is contended entitled to his claim for 9 years because the learned Judge erred in law by holding the. Respondent's claim was prescribed were admissions as there in the pleadings by the Appellant Respondent had not been paid his salary since that the December 1982 which admissions nullified the operation of prescription. Mr. Pardiwalla for the Appellant submitted that in terms of Article 2271 of the Seychelles Civil Code the Respondent's claim was prescribed as from December 31, 1982 or if it could be said that his services were sought by the Appellant, as found by the learned Judge, as from August 1984. the learned Judge was wrong, in treating the agreement as a continuing contract, in allowing He argued that in consequence 5 years remuneration, because the Respondent -6- left Seychelles for his own purposes and though the learned Judge had not accepted that the Appellant had terminated its business entirely, legislation had effectively terminated' the insurance business. He further submitted that the insurance aspect of the Appellant's business had nothing to do with its subsidiaries, therefore the learned Judge was wrong by relying on the fact that it was managing its investments in the subsidiary that the Appellant was still in existence. Mr. Pardiwalla conceded that there was no direct evidence that the Respondent's appointment as a Director had been terminated. the learned Judge should have held that there was a complete In the alternative Mr. Pardiwalla argued that change of circumstances as a result of the legislation with regard to the insurance business. Perera J. had said that he was unable to agree that the Respondent continued to hold the dual position of employee and director. He also had rejected the Appellant's Chairman assertion that exhibit P4 was a severance fee. He had no hesitation in holding that by exhibit P4 the Appellant to pay t7500 per annum to the Respondent agreed remuneration for future services as a director. went had been made as regards saary, fees and bonus. further and observed that in exhibit P4 no distinction But in the But he also as attorney's demanded remuneration of SR.12,000 per annum as a director. mise en demeure of May 1992 the Respondent a fee when he had been a Director. In his argument Mr. Pardiwalla also argued that although the Respondent was a nominal director he was never In the alternative paid he submitted that in light of the mise en demeure of his attorney of May 1992 the Respondent should not be awarded SR.12,000 per annum, taking into account anything more the learned Judge's observations with regard to the position of director and employee. than -7- It cannot be disputed that there was evidence before which Perera J. correctly concluded that Respondent him from was still a Director after his departure in 1981 from Seychelles. The question that was for the learned Judge to determine was whether the Respondent was entitled to be paid L7500 per annum as claimed by him. Under cross-examination the Respondent himself accepted that the amounts he had been paid by the Appellant included salary, bonus and fees but he did know the proportion of each. By coming to the conclusion that in exhibit P4 no distinction had been made between salary, bonus and fees the learned Judge erred since that exhibit merely stated a fact that the Respondent was in It is true that Perera J. found the country he received a However, in light of his specific receipt of t7500 per annum. that when the Respondent left reduced remuneration. finding that the Respondent continued to have held the director, the amount he was entitled to as a director. Respondent himself accepted said to have could dual position of employee and it was incumbent upon Perera J. to have determined Moreso, as the per annum was for Had he compared exhibit P9 of salary, bonus August 17, 1992 from his advocate and exhibit D1 of May 12, 1992 from his attorney with the Respondent's evidence, the that L7500 and fees. not be learned Judge would not/held that the Appellant agreed to pay the Respondent £7500 per annum as remuneration for future services as a director. 44.vt. submitted effect of for the learned Mr. Boulle that the the Respondent on the Cross-Appeal Judge erred in subjecting the prescription because there were claim to admissions in the pleadings in paragraph 4 of the Appellant's Defence that the Respondent had not been paid since December He referred to Article 2275 of the Civil Code of that has extended the scope of 1982. Seychelles and jurisprudence that Article whereby the operation of prescription could be of a written overcome acknowledgment of the debt by the debtor. It is true that possession creditor's the by -8- nothing in prindiple of the Seychelles Civil Code jurisprudence of civil law invalidates any or inhibit its application in Seychelles except to the extent it is inconsistent with the Seychelles Civil Code. However, the Seychelles Code of Civil Procedure clearly requires that material facts alleged in the Plaint must distinctly be denied or they will be taken to be admitted. Mr. Boulle cited Marcel Planiol and George Ripert Treatise of on the Civil Law, Vol.2, Part 1, 11th ed., 1939 Translated by the Louisiana State Law Institute at para. 695 which states: and that even suffices, jurisprudence admits that a tacit "The such acknowledgment from the fact acknowledgment may be inferred the debtor has commenced his defence by that incompatible with payment. allegations He for example, allege compensation, and if may, creditor owed him it should he will find himself in the position nothing, of having Oct., 1894, S.95.1.29), and it will be the same if the debtor commences by declaring that he Req., 8 July, 1926, Gaz. owes Palais, 14 Sept.)." result that his acknowledged the nothing (Cass. (Cass., debt shall Nevertheless before jurisprudence that holds that it would still the Defence time limits. also that prescription involves loss of rights by failing While Article 2248 states that notwithstanding a denial in constitute an admissionfit would have to take account of the Also, Article 2219 Civil Procedure. Seychelles Code of provides to act within be interrupted by an acknowledgment prescription As Mr. Pardiwalla correctly submitted that in by a debtor. of the Defence the Appellant denied having paid paragraph 4 up to December 31, 1982 and thereafter the £7500 per annum Appellant ceased payments and averred that the Respondent It follows that received neither tacitly acknowledged nor given a the Appellant had written acknowledgment of debt to the Respondent. the Accordingly Cross-Appeal. a salary up to December 31, 1982. Respondent's merit there no in is -9- Turning now to Mr. Pardiwalla's contention that there was a complete change of circumstances brought by the legislation concerning the insurance business. This did not form part of the pleadings in the Appellant's Defence. Further, the documentary evidence reveals that the Respondent did act as a director and there was no direct evidence that his directorship was terminated. It follows that it could hardly be maintained by the Appellant that there was such a complete change of circumstances which could not be by the parties that the performance of the controlled agreement could no longer fulfil parties. not have the in Had that been the position Mr. Pardiwalla would alternative argued before Perera J. that the common design of the since to SR.700 per month, the Respondent's claim was for director's fees, SR.600 as Mr. Etzin's evidence disclosed was normal director's the considered as payable to the Respondent. fees in Seychelles, should be In making the award the learned Judge concluded that year's remuneration' was subject to the effect of - and so the Respondent in terms of Article 2271 each prescription of the Seychelles Civil Code was only entitled for 5 years. correct in making his award for a Therefore Perera J. was the Respondent's Director's fees period of 5 years since would made L7500 be due each year. Looking at the amount of the award by him, there is no doubt that in giving the Respondent per annum the learned Judge failed to take into account only entitled to fees as a director whereas the that he was amount of L7500 per annum according to the Respondent himself for salary and bonus (as an employee) and fees alternative en demeure of May 1992 on he should at most only receive should have The learned Judge the Respondent annum. was inclusive (as submitted behalf of SR.12,000 per considered this. Mr. Pardiwalla in the that because of mise a director). -10- Now Article 1149 of the Seychelles Civil Code states that damages payable under it and as provided in Articles following it shall apply as appropriate to breach of contract and the commission of delict. Article 1153 provides that where the obligation merely involves the payment of a certain sum the damages arising from delayed performance shall only amount to an interest payment fixed by law or by commercial practice but should the creditor sustain special damage caused by a debtor in bad faith and not merely by reason of delay he may obtain damages in addition to interest payment. The learned Judge awarded SR.10,000 as moral damages because the Respondent according to Perera J. would certainly have suffered pain of mind due to the behaviour of an ungrateful employer. It would appear that by this the learned Judge must have had in mind the Appellant's refusal to make payment which should really be described as delayed performance. It is clear that special damage was not pleaded and there was no evidence led that the Respondent sustained special damage caused by the Appellant in bad faith and not merely by reason of delay. It follows that the Respondent should not have been given moral damages. In the result the award of £7500 per annum for 5 years must be set aside and instead the Respondent is awarded SR.12,000 per annum for 5 years for a total SR.60,000. The award of moral damages is also set aside. Costs of appeal shall be borne by each party. Dated at this day of 1995. Mahomed Ali Adam JUSTICE OF APPEAL