Masaba v Bank Of Uganda (Civil Suit 663 of 1995) [1996] UGHC 61 (17 October 1996)

Full Case Text

## THE REPUBLIC OF UGANDA

## IN THE HIGH COURT OF UGANDA AT KAMPALA CIVIL SUIT No. 663/95

ALFRED WILLIAM MASABA 111111111111111111111111 **PLAINTIFF** 10 -versus-BANK OF UGANDA **DEFENDANT** 11111111111111111111111111 BEFORE: - THE HON. MR. JUSTICE J. H. NTABGOBA - PRINCIPAL JUDGE

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## J U D G E M E N T

The plaintiff, Alfred William Masaba was one of the pensionable members of staff of the defendant, the Bank of Uganda. By its circular headed "Bank of Uganda Restructuring Programme: Early Retirement/Voluntary Termination of Service," the defendant, on 1st November, 1994 (1.11.94) wrote explaining the "nature of the difficulty the Bank was experiencing to meet its operating cost at the current rate" (see paragraph 1). The defendant reiterated its earlier information to its pensionable staff members that the defendant's Board of Directors had approved a Business Plan " which would result in restructuring the Bank with the objective of reducing its [operational] expenditure to match its income."

In paragraph of the Circular, the defendant stated: "I also communicated to you the Board's decision to work out Compensatory package to be offered to staff who may wish to 35 voluntarily terminate their services to the Bank or opt for early

$1.$

Paragraph three of the Circular stated:- 5

''Under Current Personnel Policies, eligible for early retirement if he or she However, all pensionable 10 staff will be eligible to apply for voluntary termination of service Irrespective of age or rank-----Acceptance of an application shall be a t the discretion of the Bank." 15 is 50 years or above. a staff is

The 4th paragraph of the Circular then set down a detailed comprehensive package for those who "will elect to leave the Bank 20 under the early retirement and/or voluntary termination of t he services scheme." According to the circular the package was to facilitate the resettlement of staff who will elect to leave the Bank--

" Paymen t of t lie fol lowing The package wa s as fol lows i compensation package:\*

for service. salary per year 1. One months gross

*2.* Early retirement:\* those 50 years and older, salary for of service. with 15 more years (a) 6 months gross

**55**

(b) 3 months of gross sal ary for those 45 years and older. service, with 10 or more years of

3. Long servicer

2 months gross pay for those with 10 years service and aged 50, increasing by 2 a t the age of 55. 10 a maximum of 12 months months per year to

4. Adj us tment allowance

20% of two years gross earnings. Provident Fund Contributed by both the employee and Bank, three months pay in lieu of 15 notice and accumulated leave will also be paid additional separate settlement. as an

- 5. 20 The Bank shall have the right to off set all personal loans, other than housing loans,. granted to employees leaving the Bank under the compensatory package. secured by Hypothecation of Mai Ip loan, which is currently 25 leasehold deposited with the Bank^ sha 11 Land Certificate or loan to be repaid oyer agreed between the concerned before departure^ be registered as a a period to be Staff Indebtedness to the Banks-Howe ver, any housing legal mortgage Bank and each employee. - will be payable by the 6. the package Bank,H Income Tax - payable on

words s ~ The circular concludes with these **55**

"The purpose of this circular is to invi te pens i ona ble staff who wish to apply for early retirement/or voluntary termination 5 of services to the Bank under this scheme to do their applications or Administration no t later than 30th November, so by submilting to Ag. Executive Direct 1994."

The benefit to be derived by the Bank from the scheme is con t a ined in paragraph 1 of the Bank*'* s ear 1i er circular of 21.9.94 Ref: G. O.19. It states:-

"At its meeting on September 20. 1994 the Board of Directors approved a Business Plan tor the Bank that wi11 result t he 20 next few years. This plan is that the Bank maintains and strengthens its role as a viable and independent the financial 25 needs' and providing efficient banking—arijl—c 1 ear\_i nj\* ensuring stability in financial markets, supervising agency capable of in significant changes over system, meeting the Country's\_currency intended to ensure

## systems."

added for emphasis?. (under 1ining

50 for the defendant for a period The plaintiff who had worked and 31.12.94 applied to the of be tween 29.9.74 about 21 years of the new retirement package and defendant to take the advantage He bus t have been 40 to 41 years he was allowed to retire early. the defendant did not 55 compla ins t ha t old at that time. He now

honour its obligation in that the defendant, which is $in$ possession of a title deed to his land as a security for the housing loan the defendant advanced to him, deducted a sum of 5 shs.10,000,000/ $\alpha$ in recovering the loan. He argues that the deduction of the sum of shs.10,000,000/= was in breach of the clause in the circular contained in paragraph 5 thereof that the Bank shall not off-set the housing loan; that "any housing loan, which is currently secured by hypothecation of the mailo land Certificate or Leasehold deposited with the Bank, shall be registered as a legal mortgage loan to be repaid over a period 15 to be agreed between the Bank and each employee concerned before departure." The plaintiff says that he has never agreed with the Bank on what period in which to repay the building ioan and that, in any case, the Bank which is holding his certificate of title as security for the loan, should not have, at the same time, deducted the loan amount from his voluntary retirement package. The Bank argues that its circular was not a contract and therefore it was not obliged to honour its clause on the treatment of the housing loan of the plaintiff. According to paragraph 4 of the Bank's W. S. D.:-

"The defendant shall aver that the specific terms of the housing loan agreement were that it would remain operative and binding on the parties only as long as the plaintiff remained in the employment of the defendant, and by the plaintiff opting to leave the defendant's employment, the defendant was entitled to recover its monies."

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The defendant further avers that i ts circulars did not in themselves constitute an agreement between the plaintiff and the def endant and 5 t herefore did nol/cou1d no t amend/alter t he original housing loan agreement; that the pl a intiff's certificate of title is ready for t he plaintiff's collect!on from t he defendant, but t ha t the plaintiff has refused and/or omitted to 10 collect the Certificate of title.

In the alternative, the defendant avers that if the circular constituted an agreement between the defendant and the plaintiff 15 (which is denied) the plaintiff refused to to the repayment of the housing loan, hence opt ing out of t he arr angemen t and forcing t he de f endan t to recover its monies. with the defendant's officials as come for negotiations

The following were the agreed issues for the determination of this ca se:-

Contract between the plaintiff and the defendant 1. Was 25 regarding the Voluntary retirement scheme? it so what were the terms? there a

such a Contract • wa s the defendant guilty of 2. If there was its breach? 50

circular to its employees regarding J.' Did the defendant's retirement scheme amount to the Voluntary actionable under the law? 55 a misrepresentation

4. Was any loss occasioned to the plaintiff by the defendant?

5 . What remedies are open to the plaintiff?

I think I should start wi th the third is sue. Ra t her than saying that the circular regarding the voluntary **no** ret irement scheme amounted to a misrepresentation, 1 would s ay that they amounted to an invitation to treat, in which case, the forms (Exhibit PV. ) filled by the plaintiff in an application to be considered for retiring under the retirement scheme would be 15 In other words, two Circulars (Exhi bits Pill and P. IV.) were an invit a ti on t o treat. The plaintiff's application on the form (Exhibi t P. V. *)* was an offer by the plaintiff. The acceptance by the defendant would have 20 been contained in Section C of.. Exhibit P. V headed "Decision of the Work Force Adjustment Committee". However, 1 notice tha t the section was not filled. In other words, no decision was made by the Work Force Adjust men I CommiI Iee. The plaintiff ha s lost in the 25 that the documents in his possession got tes t i f ied leaving the Bank. ExhibiI P. V was not objected process of his of the offer t herein are se t to by the defendan t. The terms section B of Exhibi t P. V as fol lows:- forth in detail in t he Governor's defendant*'*s taken as an offer.

" The package will consist of:-

salary x ZO. Zi) years of service. 1). One month's gross

salary as Adj us tment allowance. 2*)*. 20% of 2 year's gross **55**

3). Both the Bank's and his contribution to Provident Fund, if any.

4). 3 months of basic salary in lieu of notice.

5). Leave allowance for 4 months (Sept - Dec, 1994).

6). Cash in lieu of 7 days for $1994/95$ . $\mathcal{L} \sim \mathcal{L} \sim \mathcal{L}$

From the evidence on record, it seems that the plaintiff is not complaining about the above items of which "the package will consist. It would appear he got all the payments under these items. His complaint is that when he was paid under the items, the payment was ploughed into liquidating the housing loan and yet his understanding from the circular, Exhibit P.1V was that "The Bank shall have the right to offset all personal loans, other than housing loans, granted to employees

leaving the Bank under this compensation package. However, housing loan which is currently secured by hypothecation of Mailo 25 land certificate or leasehold deposited with the Bank, shall be registered as a legal mortgage loan to be repaid over a period to be agreed between the Bank and each employee concerned before departure." (underlining added for emphasis).

I understand the plaintiff arguing that he tilled the application form subject to or with the understanding of, the clause on repayment of the housing loan slipulated in the circular (Exhibit P.1V). The detendant seems to deny that those 35

were the terms and to say that the housing loan agreement between the plaintiff and the defendant should be viewed as separate from the agreement on the retirement package.

In the first place, I do not agree that circular (Exhibit P.1) made on 24th lanuary 1995 is a term in the transaction. $40$ This is because it was made and issued after the plaintiff had retired. This circular, however, is useful in so far as it tends to show the intention of the defendant with regard to the application of the payment of compensation under Voluntary Termination Scheme, 15

At this juncture then I am able to answer the first issue in the affirmative. As for the second leg of issue number One, I would answer that the terms of the contract were not only as $-20$ filled in Section B of Exhibit P. V but also subject to the clause on the repayment of a housing loan appearing in the circular $\cdots$ (Exhibit P.4V), namely, that repayment of the housing loan would $\cdot$ . be made by the defendant demanding the security by "hypothecation of mailo land certificate or leasehold deposited with the Bank; 25 and registered as a legal morigage loan to be repaid-over a period to be agreed between the Bank and the retiring employee. To hold otherwise, for instance, that the scheme about the repayment of the housing losh means ploughing into it the disbursements under the Voluntary Termination Scheme, would be 30 I will give reacons:inequitable.

$\overline{\phantom{a}}$

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The plaintiff, a youngman of 41 years, whose record of $\mathcal{L} \leftarrow$ employment was, undoubtedly, 83% or very good, cannot be said to $\mathsf{S}$ have volunteered to retire before his retirement age in order to use the retirement package to settle a housing loan which had a comfortable scheme of settlement during his employment. I am convinced that had the plaintiff been told that the package to 10 be paid to him would be used to defray his housing loan, he would not have agreed to retire and when he did fill the form of application (exhibit P. V) he was answering the invitation in the circular (Exhibit $1V$ ) which clearly stated that the housing loan $15$ would be secured by a land title and, how could he have doubted this when the defendant was already in possession of the land title? And so, the terms of the contract were as set out in the circular, the contents of section B of Exhibit P. V being subject $20$ to the arrangement for repayment of the housing loan set out in exhibit P.1V.

Further to strengthen the argument that the parties could not have intended that the plaintiff should retire penniless as 25 did, I would refer to the circular (Exhibit P.111) in he paragraph 3 where it is stated:-

"Accordingly, one of our Business Plan is the objective 30 of reducing our operating expenses to more accurately match our revenues. In order to achieve this, the Bank will be offering a Voluntary fermination Scheme which staff may take advantage of to assist their departure from the 35 Bank. It has always been our policy to treat our employees

fairly and the Bank can reasonably afford." the Termination scheme will be as equitable as

secured housing loan whose repayment employient, cannot be said that he was treated fairly and reasonably when the Bank paid him retirement benefits and pulled 10 them out to repay the secured loan. 1 find that the defendant committed to honour its obligation to offer arrangement for the repayment of the loan and instead utilizing hi to pay themselves and a t the title *15* s ame time keep hi s cer tificate of that was security for the loan. would not disrupt his s retirement benefits a breach of the contract by failure Where an employee had a

I now proceed to discuss loss 20 the defendant to the plaintiff. the fourth issue whether any was occasioned by

In the first place, we need to look a t t he benef i t s that the plaintiff under the Voluntary Termination were to entitled to the payments stipulated in Exhibit Scheme. 25 P. V, plus arrangemenI for the in Exhibi t an P. IV a s wel 1 as housing loan. He los t the repayment of his which the defendant deduc t ed to being his re t iiemcn1 benefi t s leads me t o the -fifth issue as repay his housing loa; and this i s the plaintiff. t o wh a t remedies are open to 50 balance of his package of shs.lO>/= interested to payment of the the time of payment. the Current bank rate at with interest a t in the first genera 1 damages place, he is entitled to s h s 10m *I* - The plaintlH b.< .15° ior because he was put under accrue tc sum of He wa s He certainly

extreme hardship. This is a man who trusting in the word of his employers, volunteered to retire at an early age of 41, to start fresh calling utilising retirement benefits. $\mathbf{a}$ instead facilitating his resettlement as promised in circular exhibit P.1V, the defendant withheld his money. He has related all the hardships he suffered as a result of that treatment. His wife deserted him A His children are out of School and, to use his words, he has since retirement lived like a pauper. He felt let down and I do not hesitate to award him a sum of shs.8m/= discounted to shs. $7m$ = owing to the fact that it will be paid to him together with interest from the date of this judgment till payment in full, as well as taking into account imponderables. I award him also Costs of this suit.

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$1. H.$ **NTABGOBA**

PRINCIPAL JUDGE 17/10/1996

$17/10/96$ ; Mr. Matovu for plaintiff

Mr. Hudson for defendant.

$\frac{Count}{:}$

Judgment delivered and dated. Wanguisi $D. K.$ DEPUTY REGISTRAR $17/10/1996$