Mugisa and 22 Others v Unilever Uganda Limited (Civil Suit No. 237 of 2003) [2010] UGHCCD 165 (8 November 2010)

Full Case Text

ANNEX A

## THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA [CIVIL DIVISION] CIVIL SUIT. No. 237 OF 2003

$\mathbf{v}_\mathbf{s}$

BENEDICT MUGISA & 22 OTHERS ----------- PLAINTIFFS

UNILEVER UGANDA LIMITED

DEFENDANT

Before: The Honourable Mr. Justice Yorokamu Bamwine.

## JUDGMENT

The plaintiff's claim against the defendant is for recovery of unpaid arrears of salary and allowances plus unpaid terminal benefits under the defendant's terms and conditions of Service. They claim that they started as employees of M/s Blenders (U) Ltd; that in 1994 the defendant took them on as its employees but terminated their services in 1997 without settling their. outstanding claims. Hence the suit.

In its defence, the defendant denies that East African Industries Ltd took over any of the plaintiffs and therefore disputes the claim.

At the conferencing the parties agreed that:

1. The plaintiffs were employed by Blenders (U). Ltd at different intervals.

$\frac{1}{1+\frac{1}{2}S} \frac{PWH}{PWH}$

ROCHT?"

FIEL TRUE

- 2. The defendant took over the management of Blenders (U) Ltd on 4lh August, 1994. - Holdings BV. 3. The defendant is a subsidiary company of Unilever Overseas • - 4. Unilever Overseas Holdings BV also owned the majority ofthe shares in Blenders (U) Ltd (as per Annual Return made up to 9/8/2002).

## Issues:

- 1. Whether the plaintiffs were employees ofthe defendant. - 2. Whether the defendant terminated the plaintiffs' services. - 3. Reliefs, if any.

## Counsel:

**(**

**p**

.4-

**1**

Mr. Kanyunyuzi for the plaintiffs

Mr. Kanyemibwa for the defendant.

Issue No. 1: Whether the plaintiffs were employees of the defendant. As the first point of agreement shows, the plaintiffs were employed by Blenders (U) Ltd. at different intervals. They claim that under the agreement **\*** dated 4th August, 1994 between the Government of Uganda and Unilever Overseas Holdings BV the plaintiffs were taken on as employees of the defendant.

The said agreement is on record as Exh. Pl. The defendant denies having employed the plaintiffs. It is therefore crucial for the court to examine Exh. Pl and determine whether the plaintiffs became the defendant's employees under the said agreement.

**2**

**I**

I should perhaps state at this stage that at the conferencing the plaintiffs had indicated that they would lead evidence of5 witnesses and the defendant 2. As it turned out, the plaintiffs led evidence of three witnesses and the defendant none.

1 will do the best I can in the unique circumstances ofthis casA-.-

Under the said agreement, Exh. Pl, the Government of Uganda (GOU) sold all its shares in Blenders (U) Ltd and agreed with the purchaser in clause 3(c) ofthe agreement as follows:

- "c. As part of the going concern all personnel on Blenders pay roll as at 31st May 1994 (excluding Directors on the Board of Blenders) as listed in schedule I will be taken on. - Any personnel released as a result of restructuring the business of Blenders will be compensated by Blenders in accordance with Ugandan Law."'

It is noteworthy that under clause (b), the GOU undertook to immediately relinquish the management and business of Blenders (U) Ltd to the defendant which was then still known as Uganda Associated Industries Limited. I

If I have understood Mr. Kanyemibwa's submission very well, and I hope I have, the defendant's denial of liability is based on the fact that under the agreement, Unilever Overseas Holdings BV was to assume ownership of Blenders as a "going concern"; that it was also agreed that the existing Board of Directors of Blenders (U) Ltd was to be dissolved and Unilever-Overseas Holdings BV was to appoint to the Board of Directors of Blenders persons nominated by Unilever Overseas Holdings BV or its appointed nominees. This submission is correct.

**I** *f9-*

**1**

I ai.n unable to accept the argument that under clause-3(c) of the said "| agreement, the defendant did not take on the plaintiffs in its employment j- ; when it took over the management and business ofBlenders (U) Ltd because y . (lie agreement itselfindicates otherwise.

In my view, since the parties had agreed that Unilever Overseas Holdings" BV was to assume ownership of Blenders (U) Ltd as a going concern, the j expression "will be taken on" in clause 3(c) of agreement meant nothing else | but that the employees would henceforth be the responsibility of the J purchaser.

I am fortified in this interpretation by the fact that the same parties agreed that;

*I I*

**, . -V .. •**

**I**

*ft-*

Any personnel released as a result of restructuring the business of Blenders will be compensated by Blenders in accordance with the Ugandan Law" **cc**

, implying that those who would be affected during the restructuring soon thereafter would be the responsibility of Blenders (U) Ltd, and the remaining ones would be the responsibility ofthe new .owner ofthe enterprise.

From the pleadings and evidence on record, the plaintiffs were not laid offin the process ofthe anticipated restructuring, to raise inference that they fell in the category of "personnel released as a result of restructuring the business ofBlenders". Even ifthis was so, the defendant has not so pleaded.

I They worked for the new owner as they waited for fresh appointment letters • until 1997 when their services were terminated.

In all llicsc circumstances, it cannot be true, as learned counsel for the <dclUndu.nl> has submitted, that the defendant was simply constituted as a manager ofthe plaintiffs' employer, Blenders (U) Ltd.

I. have not accepted this submission principally because from the agreement .itself, clause 3(b), the GOU did not only immediately relinquish the ■:. Thilanagement but it also relinquished the business to the new purchaser. It cannot be correct in my view that Blenders (U) Ltd retained its original stature and was the one liable to settle the plaintiffs' entitlements.

From the testimony of PW1 Benedict Mugisa, he started working for Blenders (U) Ltd as Store Keeper in 1979. Fie remained with them till 1994 when the company,was privatized. In his own words:

on were "After the said privatization, management and business of Blenders together with us who had been taken relinquished to Uganda Associated Industries Ltd (UAIL)" His evidence tallies with clause 3(b) and (c) ofthe agreement, Exh Pl.

t?/'

**I**

*i*

**1**

I /

**I** »?•

**1**

He testified further that between 1994 when the company was privatized to 1997 when he was terminated, he was not issued with any documents. "

The new management kept promising that they were going to issue them with documents after being cleared by their head office in Nairobi. This went on until 1997 when his services were terminated. He testified:

"Between 1994 and 1997, we were earning salary. For us as we know it was Unilever paying us. This was because UAIL (Uganda Associated Industries. Limited) later changed name to Unilever (U) Ltd. We were terminated by Human Resources Manager of

Unilever. He used the former Blenders (U) Ltd forms. Twenty three of us were terminated. It was an instant termination, without any notice to us".

being paid by the defendant was not I lis evidence that the plaintiffs were challenged by the defendant in cross-examination or at all.

From the evidence ofthis witness also the plaintiffs were paid money in lieu of notice. The payment was processed by the Human Resources Manager of (he defendant, Mr. Ssegawa. He tendered in evidence leave forms dated 17/2/1997 in which leave was granted by the defendant, Unilever (U) Ltd.

He also attended a course in Fire fighting (20th - 22nd August, 1996) under the sponsorship ofthe defendant.

From his evidence, he served the defendant for three years after it had taken over the business of Blenders (U) Ltd. I have seen no reason to disbelieve his evidence, especially his testimony that Blenders (U) Ltd was on 1st Street Industrial Area and Unilever on Nyondo Close in Bugolobi and that upon the defendant taking over the business, he was transferred by the defendant to its Bugolobi business premises.

PW2 James Mufumbiro had also been employed on the same terms as the plaintiffs. Flis case is, however, slightly distinguishable from that of the plaintiffs' because for him he got a fresh letter of transfer to Uganda Associated Industries Limited. This would not of itself imply non-existence of a contract between the plaintiffs and their new employer, the defendant, because in general, no particular formality is required for the creation of a valid contract. It may be oral, .written, partly .oral and partly written, or even implied from the conduct. In-the instant case the contractual relationship

**I** *fl-*

**I** between the plaintiffs and the defendant not only arises from Exh. Pl but also lium (he conduct ofthe parties.

In law a fact is said to be proved when the court is satisfied as to its truth, and the evidence by which that result is produced is called the proof. The general rule is that the burden of proof lies on a party who asserts the affirmative of the issue or question in dispute. When that party adduces evidence sufficient to raise a presumption that what he asserts is true, he is said to shift the burden of proof: that is, his allegation is presumed to be true, unless his opponent adduces evidence to rebut the presumption. The standard ofproofis on the balance ofprobabilities.

Applying the above principle to the instant case, the plaintiffs have, in any opinion, adduced sufficient evidence to show that they were employees of the defendant up to April 1997. In J. C. Mufumbiro Vs Unilever Uganda Limited HCCS No.943 of 1999,. the plaintiff sued the defendant for wrongful dismissal. The defendant had contended in its WSD that the Sale agreement between the Government of Uganda (GOU) and Uganda Associated Industries expressly placed staff benefits on the GOU and not the defendant. This argument was apparently abandoned during hearing.'In the end the defendant footed the bill.

The defendant's own witness, DW1 Onyait stated in that case that he was a competent witness for the defendant. He stated, and I quote:

**1**

"Plaintiff previously worked for Blenders (U) Ltd. Unilever bought this company in 1994 " [p.13 of the record of proceedings].

**7**

This evidence came from the defendant's own witness. On appeal Engwau JA observed (James Mufumbiro Vs Unilever CACA No. 85 of 2005 at p. $18:$

"The Human Resource Manager of the respondent, one Onyait John Steven, DW1, confirmed that when Blenders (U) Ltd was all contributions paid by the members of staff were dissolved, paid to the respondent".

In the absence of any evidence offered by the defendant to the contrary, I am inclined to accept the evidence of PW1-PW3 as truthful as it is supported by

$Exh. P1$ , clause 3(c) thereof in any case.

have, therefore, come to the conclusion that from the evidence on record the plaintiffs were employees of the defendant upto April 1997.

Issue No. 1 is answered in the affirmative.

能了

Issue No. 2: Whether the defendant terminated the plaintiffs' services.

In paragraph 12 of the plaint, the plaintiffs plead that:

"On or about 21st April, 1997 the plaintiffs' service (sic) and all individuals listed in annexture A to the plaint were terminated but were given terminal benefits according to the old M/S Blenders (U) Limited terms $\ldots$ "

It is not stated in the plaint as to who terminated the plaintiffs' services. Whoever drafted the plaint on behalf of the plaintiffs appears to have been a novice. However, since the defendant had taken over the management and business of that company, and the terminations were carried out during the time when the plaintiffs were in the service of the defendant and by the

defendant's own Human Resources Manager, one can easily overlook the omission in the plaint in the greater interests of justice in terms of Article $126(2)$ (c) of the Constitution which enjoins courts to administer substantive justice without undue regard to technicalities.

I would make a finding that their services were terminated by their employer, the defendant in this case, and I have done so.

The second issue is also answered in the affirmative.

Issue No.3: Reliefs if any.

$\mathcal{L}_{\mathcal{L}}$

From the plaint, paragraph 12 thereof, the plaintiffs were paid terminal benefits. They are unhappy about this because what they were paid was in accordance with the old M/S Blenders (U) Ltd's terms and conditions of service instead of the defendant's obtaining terms and conditions of service. Whatever they were paid has not been disclosed to court but from the evidence of PW1 Mugisa, they were paid money in lieu of notice and terminal benefits based on the old terms and conditions of service.

The legal position is that where a person is employed and one of the terms of employment includes a period of termination of that employment, the damages suffered are the wages for the period during which his normal notice would have been current.

In the instant case, it is the evidence of the plaintiffs that between 1994 to 1997 they were not issued with any documents. In his own words:

"They promised us that we shall have them as they get orders from Nairobi which was the centre of UAIL by them. They never gave us what we requested for. We continued requesting for them orally until we were terminated in April 1997".

I have seen no reason to doubt this evidence. I have, therefore, accepted it as truthful.

The plaintiffs' first prayer is for a declaration that between August 1994 and April 1997 they were employees of the defendant. In view of my finding on issue No.1, there is no good reason for me to deny them this prayer. Thave therefore granted it.

Their second prayer is for an order that they be paid arrears of salary and allowances in accordance with the defendant's terms and conditions of service and their third prayer is that they be paid terminal benefits in accordance with the terms and conditions of service of the defendant.

The rule has long been established that special damages be pleaded and strictly proved. The law also requires that claims for special damages' be particularized in the plaint and proved at the hearing by way of oral evidence. In the instant case, the plaint does not show how much they are claiming from the defendant. Details are, however, contained in a mass of additional documents that found their way onto the court record during the nendency of the suit.

I have appreciated the plaintiffs' inability to particularize their claim in the plaint at the time they filed the suit. The defendant was unco-operative with them because of its erroneous stand that the plaintiffs did not become its

$10$

**7\*** employees at any one stage. Accordingly, the quantum of salary arrears, allowances and balanceonterminal benefits remained uncertain. In view of (he court's finding that the defendant is liable to the plaintiffs on the two , claims, I would leave it to the parties to compute the same and have\_the amount paid over to the plaintiffs. The defendant is certainly better placed to v( give accountability of the same since it has records of their entitlements at /4bc time. I order that they be paid the balance of their salary arrears, , allowances and terminal benefits based on the defendant's termsand , A;'. A-sopditions ofservice.

...^TA^liey have also prayed for interest on (b) and (c) of 35% per annum from 4th •August 1994 and 21st April 1997 respectively till payment in full. Interest is a discretionary remedy in a case of this nature. It is awarded whenever a wrongdoer deprives the other of money which is rightfully his. An order for interest would compensate the plaintiffs for the lost use oftheir money from the time the suit was filed. Mere recovery of the principal sum is not enough. For reasons stated above, the plaintiffs' entitlements upon ( computation shall attract interest at court rate (not the extortionate 35%^ prayed in the plaint) from the date offiling the suit till payment in full. '

As regards the prayer for general damages, it only appears in the submissions of learned counsel for the plaintiffs. I would note also that a ■■ rule has long been established that a party is expected and is bound to prove the case as alleged by him and as covered in the issues framed. He will not be allowed at the trial to change his case or set up a case inconsistent with what he alleged or prayed for.in his pleadings except by way of amendment

**I 4**

•■i'.fT'r'Ai'f

**11**

**\_L**

**i** i

**I I** of (In? pleadings; Interfreight Forwarders (U) Limited Vs EADB [1994- I **ICB** 54. •'

Since (here is no prayer for general damages in the plaintiffs' pleadings, in t he circumstances ofthis case I am inclined not to award any..

I have therefore not awarded any. *y. .:■■■■*

> As regards costs, the usual result is that they follow the event. The plaintiffs shall, therefore, have the taxed costs ofthe suit.

Orders accordingly.

**«**

Before I take leave of this matter I should perhaps observe that after the parties had closed their respective cases as regards adducing oral evidence and while the matter was awaiting filing of written submissions, learned counsel for the plaintiffs kept introducing on record documents which the other party had not seen. I do not know what for he intended them to prove but I was certainly not impressed by that conduct. The practice is disruptive and unethical. Such attempts by parties through counsel to score from off- **/ • •** side positions must be condemned.

Dated at Kampala this day ofNovember, 2010

Yorokarpu Bamwine Judge *'*

**4**

**I**

C'Vv.7

**12**

**I**