20100430 TZHC Dar es Salaam

\ Fr IN THE HIGH COURT OF TANZANIA AT DAR ES SALAAM CIVIL CASE NO. 76 OF 1998 LEANDRI LEONARD TAIRO URASSA ...... PLAINTIFF VERSUS THE BOARD OF TRUSTEES OF SOCIAL ACTION TRUST FUND .................. DEFENDANT Date of Last Order : 121212009 Date of Judgment : 301412010 JUDGMENT Shangwa, J. On 23rd March, 1998 which is over twelve years ago, the plaintiff Leandri Leonard Tairo Urassa presented his plaint in this court for filing and it was accordingly filed. At y 2 paragraph 4 of his plaint, the plaintiff states that he was employed by the defendant as Chief Executive Officer on 16/8/ 1995: At paragraph 6 of his plaint, he states that he was terminated from employment by the defendant on 6/2/1996 and that his termination from employment was unfair. At paragraph 5 of his plaint, he states that under the terms of his contract for employment, he was to work for four years with an option for renewal. At paragraph 3 of his plaint, he Is claimIng for specific damages of USD 453,500 and Tshs. 29,897,500/= for loss of his entitlements from the date of termination to the end of the contractual period. At paragraph 9 of his plaint, he states that according to the terms of his contract of employment with the defendant, he was entitled to the following benefits: - Monthly Transport Allowance Tshs. 392,0001= Monthly Residential Security Allowance Tshs. 120,0007= Monthly Electricity Allowance Tshs. 85,000/ = Monthly Water Allowance Tsh.s 10,000/ = Monthly Telephone Allowance Subsidy Tshs. 20,000/ = Monthly Medical Allowance Tshs. 20,0001= Annual leave Tshs 2,400,0001= 25% gratuity at the end of contract USD 84,000. On 8th May, 1998, the defendant the Board of Trustees of Social Action Trust Fund (SATF) presented its written statement of defence. On 9th September, 1998, the defendant presented an amended written statement of Defence. On 24th March, 1999,. the defendant presented another amended written statement of Defence which is ' 0 4 headed as 2nd Amended written statement of Defence. In its pleadings, the defendant avers that the plaintiffs termination from employment was justified and that it was in accordance with the terms of his employment. The I defendant denies the contents of paragraphs 5 and 6 of the plaint and puts the plaintiff to strict proof thereof.. The defendant avers that the plaintiffs contract of employment was frustrated by circumstances such as lack of funds to administer its affairs and some losses caused by mismanagement. At paragraphs 13 to 16 of the 2h Amended written statement of Defence,, the defendant put up a counter claim that the plaintiff was advanced a total of TJSD 24,000 being housing allowance for 12 months at the rate of USD 2,000 per month and that at the time of his termination from employment, the plaintiff had worked with the Social Action Trust Fund for six months only and 5 that there was a balance of USD 12,000 to its credit and that as he was entitled to USD 4,700 being his month's salary in lieu of notice following his termination from employment, this amount, once set off from the unutilized fund of USD 12,000 advanced to him as housing allowance there is a balance of USD 7,300 to be paid by the plaintiff to the Social Action Trust Fund.. On 301h May, 2000 Msumi JK as he then was conducted mediation between the parties but it failed. Thereafter, hearing of the suit was assigned to Lugazia, J. who recorded part of P.W. 1 's testimony in chief. Due to his transfer to the Land Division of the High Court, the suit was re-assigned to me and I continued with the hearing of P.W. I 's testimony in chief and heard the defendant's counter - claim and its defence as a whole against the plaintiff's claims.. At the commencement of the hearing of the suit, the following issues were framed by the court: Whether the Plaintiff's employment was properly terminated. Whether the employment contract was frustrated or breached. Whether the Plaintiff is entitled to all the salaries for the whole contractual period. Whether the Plaintiff is entitled to other benefits. as itemized in paragraph 9 of the plaint for the whole contractual period Whether the plaintiff was entitled to use the defendant's car after termination of his employment.. A 7 Whether the plaintiff is entitled to general damages as claimed. What reliefs are the parties entitled thereto. In this case, the plaintiff was represented by Mrs. Kato, Advocate and the defendant was represented by Mrs. Rwebangira, Advocate. In his examination in chief, the plaintiff told this court that in March, 1996, he received a letter Exhibit 14 dated 29/2/1996 from USAID signed by Mr. Thomas Tengg (private sector officer) informing him that all employment contracts have been terminated as of February, 1, 1996 except that of Ms. Winnie Bomani and that he should hand over the office and motor vehicle keys to Ms. Winnie Bomani. He said that on 5/3/1996, he wrote a letter exhibit P.15 in reply to Mr. Thomas Tengg's letter informing him that the Board of Trustees have, not - -. - S written any letter to him for terminating his employment contract with the defendant but that he never got any reply. He said, he handed over the office keys to Ms Winnie Bomani and retained the keys of motor vehicles until when the Oysterbay Police ordered him to hand over thOse keys to Ms Winnie Bomani which he did. He said that he hand to retain the keys of motor vehicles awaiting for the response from the Board of trustees about his job status, and that -d-uring that time he never used those vehicles. He said that after suspension of the activities of the Social Action Trust Fund, he stayed at home and that when the said Fund's activities were resumed, he was not called back to office, and that his post of Chief Executive Officer was advertised in the Sunday Observer News Paper dated 1st September, 1999. Exhibit 16. He said that from the date when he was asked to hand over the office keys and motor vehicle keys to Ms. Winnie Bomani, he has never received any letter from the Board of Trustees of the Social Action Trust Fund terminating his employment. He continued to say that according to his employment contract, the one who was supposed to terminate his contract is the Board of Trustees and that the letter he received from Thomas N. Tengg is not a termination letter of his employment.. Based on what he told this court, the plaintiff argues that his termination was wrongful and that he is entitled to be paid by the defendant all his entitlements stipulated in his employment contract for the period of 3 years,. six months and 15 days which he could not render his services with the Social Action Trust Fund as a result of his wrongful termination.. Apart from that, the plaintiff prays for Shs. 300,000,000/= as general damages plus 30% interest from the date of filing this suit to the date of judgment and interest on the specific damages from the 10 date of judgment until full payment plus costs. Concerning the defendant's counter - claim, he said that he does not owe anything that was counter - claimed by the defendant. On the part of the defendant, there was one witness who was called to testify on its behalf namely Beatrice Mgaya who identified herself as the Chief Executive Officer and grants Manager. This witness told the court that the plaintiff's employment with the defendant was. terminated after a report by Auditors from Price Water House in which it was revealed that he was mismanaging the Social Action Trust Fund's resources and that the Appointors had to intervene by issuing instruction to the chairman of the said Fund to terminate the operations of the Fund. She further told the court that according to the Auditor's report, payments were being processed by the single person namely the plaintiff to the extent that there was no petty 1]. cash limits and that some expenditures lacked proper documentation. That the voucher for USD 27,000 payable as rent to the Land Lord was in the plaintiff's name. That the Appointors suspended the Fund's operations in February, 1996. That the plaintiff worked with the Fund for six months only and he was terminated. That the plaintiff was entitled to 25% of his basic salary as gratuity after the expiry of the contract. That the plaintiff had received an over advance payment of housing allowance amounting to USD 15,500. That there was a clause in the contract of Employment that termination of employment could occur before the expiration of the period of contract by giving the plaintiff a three month's notice or by paying the plaintiff one month's salary in lieu of notice. That when the Appointors notified him about the suspension of business operations of the Fund, he did not respond. That when he was asked to hand over the Fund's properties to Ms. 12 Winnie Bomani as instructed by the Appointor, he refused to do so and that after termination of his employment contract, he stayed with the Fund's car for 90 days. That the donor of the Fund was USAID who ordered for suspension of the Fund's business and reconstitution of its management. That the plaintiff is entitled to one month's salary and his repatriation costs as per the terms of the contract of his employment. In her closing written final submissions, learned counsel for the defendant Mrs. Rwebangira raised a point of preliminary objection that this court has no original jurisdiction to hear this suit as It involves a trade dispute, and that it is the Industrial Court which had such jurisdiction. She cited the case of Tambueni Abda11ah and 89 Others V. the National Social Security Fund CAT Civil Appeal No. 33 of 2000 in which their Lordships 13 Makame, Kisanga and Ramadhani JJJA held that the High Court has no original jurisdiction to hear a suit involving a trade dispute and that it is the Industrial Court which has such jurisdiction. She submitted that although the question of juri-sdiction was not earlier raised in the p-leadings, as jurisdiction is a point of law,. it can be raised at any time even on appeal. In support of her submission, she cited the case of Mukisa Biscuits Manufacturing Co; Ltd V. West End Distributors Ltd CA 1970. I agree with learned counsel for the defendant that the issue of jurisdiction can be raised at any time even on appeal. However, it is quite preferable that such an issue should be raised at the earliest stage in the pleadings so tL • - - - - - - - - - -- - - - 4 14 that it may be determined before the court proceeds with entertaining the matter which it has ho jurisdiction to entertain or hear and determine. The stage at which this issue has been raised in this court that is during the final closing submissions when the court had already conducted full hearing of the suit is not a proper stage because the court has already exercised its jurisdiction in the matter and it cannot abandon its determination. At any rate, I think that this court has jurisdiction to entertain this suit. Unlike in the case of Tambueni Adballah and 89 Others V. National Social Security Fund already cited where a trade dispute was involved, in this case, the dispute involved is not a trade dispute. It is a claim of terminal benefits and damages for breach or frustration of the.. plaintiff's contract of employment with the defendant. 15 After finding that this court has jurisdiction to entertain the suit between the parties, I now proceed to consider the issues which were framed at the commencement of the trial. Seven issues were framed. The first one is the major one. As already mentioned, it is whether or not the plaintiff's employment was properly terminated. According to the Agreement for employment entered into between the plaintiff and the defendant on the 3rd day of November, 1995, the plaintiff was employed as a Chief Executive Officer (CEO) for, a period of four years commencing from 16/8/1995 to 15/8/1999. His basic salary was USD 7,000 and his housing allowance was USD 2,000 per month. On top of that, his employer had to bear his transport costs and his medical expenses during his contract of service. 16 According to Article 16.1 of the Agreement for Employment, the plaintiff's contract of employment could be terminated at any time by giving him a three months notice in writing or on paying him one month's salary in lieu of notice. According to the evidence on record, the plaintiff was terminated from employment with effect from 1st February, 1996. His termination was put to his notice by a letter dated 29/2/1996 Exhibit 14 from USAID signed by the Private Sector Officer Mr. Thomas N. Tengg in which he was informed that all employment contracts have been terminated as of February,. 1, 1996 except that of Ms Winnie Bomani and that he should hand over the office keys and the motor vehicle keys to Ms. Winnie Bomani. At the time of termination of his engagement, he had worked with the defendant for a period of six months only. 17 After receiving a letter of his termination from employment, he tried to question the authority which terminated him by replying that he had not received any letter from the Board of Trustees of the Social Action Trust Fund in which his employment was terminated. Lack of a letter from the Board of Trustees informing him that he had been terminated has sparked off an argument from him that he was wrongfully terminated. According to him, the authority which had the powers to terminate him is the Board of Trustees and not USAID. Let me now consider the validity of his argument. According to the Agreement for Employment exhibit 14, the plaintiffs employer was the Social Action Trust Fund. This Fund was created under 5.. 21 of the Deed of Trust. This Deed was made on 3' day of May, 1994 between the Government of the United Republic of Tanzania and the 18 Chief Justice of Tanzania and the United States Agency for International Development and the Trustees who were Prof. Ibrahim Lipumba, Prof. Costa Mahalu, Mr. Gray Mgonja, Dr. Fatma Mrisho and Mr. Steven Mworia. Under this Deed of Trust which was drawn by Mkono .&. Company Advocates; the Chief Justice of Tanzania and the United States Agency for International Development are categorized as the Appointo.rs.. Under S. 5.3 of this Deed, the Appointors were given the power to appoint and discharge Trustees and suspend the activities of the Trust. Under S.. 7.2J.1, the Trustees, among other things, were given the power to recruit and dismiss a Chief Executive Officer for the Trust. 19 Now, there was a letter exhibit P. 13 written to the then Chief Justice of Tanzania, the late Hon. Francis L. Nyalali by Mr. Mark G. Wentling, the Director of USAID Mission to Tanzania, in which he expressed concern about lack of a quorum on the Board of Trustees of the Social Action Trust Fund and that the lack - of quorum had stagnated the business activities of the Social Action Trust Fund and that as he may recall, the Board had been informed by them as -Appointors through their letter dated 7/11 / 1995, that the Social Action Trust Fund could no longer conduct business as there was lack of quorum. In his letter, Mr.. Mark G. Wentling proposed that the operation of the Social Action Trust Fund should effectively be suspended until March 31,1996 and that the plaintiff Mr. Leandri Leonard Tairo Urassa, the Chief Executive Officer and the Finance Manager should immediately be suspended and that a team of Accountants and Auditors / 20 from Price Water, House, Nairobi had been assigned to come to Tanzania and conduct investigations into the operations of the Social Action Trust Fund and give their recommendations.. According to the letter which was written by Mr. Thomas N.. Tengg to the plaintiff dated 29/2/1996,. the Board of trustees had been requested to notify the plaintiff about the suspension of all Social Action Trust Fund's activities and the termination of all employment contracts except that of Ms. Winnie Bomani. The question as to whether the Appointors had powers to suspend the Social Action Trust Fund's activities is not in dispute.. As already mentioned, they are so empowered under S. 5.3 of the Deed of Trust. What is really in dispute 4 21 is whether they hand the powers to terminate the plaintiff's contract of employment or any other employee of the Fund. As already said, the power to dismiss a Chief Executive Officer CEO was vested in the Board of Trustees under S. 7.2.1.1. of the Deed of Trust. Being aware of thisi provision, the Appointors wrote a letter dated 6/2/1996 to the Board of Trustees( annexture 'D2' to the written statement of defence) asking the Board to notify all employees including the plaintiff that except the employment contract of. Ms. Winnie Bomani their employment contracts have been terminated as of February 1, 1996. It seems that the Board of trustees did not notify the plaintiff that his employment contract together with the 22 employment contracts of his fellow employees except that of Ms. Winnie Bomani had been terminated as of Februaryl, 1996. That is why in his letter dated 5th March, 1996 addressed to Mr. Thomas Tengg, USAID, the plaintiff expressed his hesitation to hand over the office keys and motor vehicle keys to Ms. Winnie Bomani. The evidence on record shows that by February 1,1996, the Board of Trustees of the Social Action Trust Fund, had no sufficient number of Trustees to form a quorum.. The plaintiff himself was quite aware of the problem of lack of quorum on the Board of Trustees as long ago as November, 1995 through a letter dated 7/11 / 1995 written by the Appointors to the Board of Trustees which was copied to him. According to this letter which is also marked as annexture 'D2' to the written statement of defence the Board of trustees had two 0 23 Trustees only. One of the Trustees, Mr.. Gray Mgonja had resigned. The situation worsened in January, 1996 when it was apprehended that the Board will remain with only one member Prof. Costa Mahalu because the other Trustee Mr. Steven Mworia was facing a criminal charge of the offence of arson in respect of NASACO building. To form a quorum not less than three or more Trustees were to be required. Again, the plaintiff was quite aware of the worsening situation of lack of quorum on the Board of Trustees. One of the major reasons for suspension of the business of the Social Action Trust Fund in Tanzania was lack of quorum on. the Board of trustees. Another reason was the finding by Price Water House Consultants.. that the Social Action 24 Trust Fund which was being led by the plaintiff had no capacity to adequately manage and account for its fund. Yet another reason is that there was no funds available for operational expenses.. Now, under such circumstances can it be said that the plaintiff was wrongfully terminated. For m.e I do not think so. As long as There was lack of quorum on the Board of Trustees who had the powers to dismiss him, it was proper for the Appointors to assume the powers of the Board of trustees and terminate the plaintiff as it did. Moreover, the Appointors had the responsibility to oversee the administration of the Trust. I hold therefore that the plaintiff's contract of employment was properly and lawfully terminated. 25 Coming to the second issue which is whether or not the plaintiff's contract of employment was frustrated or breached, I am of the view that the circumstances under which the plaintiff's contract of employment was terminated do not show that there was frustration or breach of contract. This is because according to evidence of Beatrice Mgaya given in defence, the plaintiff was mismanaging the affairs of the Social Action Trust Fund when he was in office as Chief Executive Officer. Her evidence is supported by the report of the Auditors from Price Water House, Nairobi who on thorough investigation found that during his term of office the Social Action Trust Fund had no capacity to sufficiently manage and account for its funds. On the third issue, this court is called upon to determine as to whether the plaintiff is entitled to all the 4, ICL 11. 26 salaries for the whole contractual period that is for the period of three years, six months and fifteen days which were remaining to complete his contractual period of four years at the time when his contract of employment was terminated by the defendant.. The answer to this issue is simple and straightforward. It is as follows: As he did not render any service to the defendant during the said period, he cannot be entitled to be paid salaries, for no work done.. I now resort to the fourth issue on which the court is asked to determine as to whether the plaintiff is entitled to other benefits as itemized in paragraph 9 of the plaint for the whole contractual period. As already indicated, these benefits are itemized as follows: Monthly Housing allowance USD 2,000. Monthly Transport allowance Tshs.. 392,0001=. 'A 27 Monthly Residential Security allowance Tshs. 120,0001=. Monthly Electricity allowance Tshs. 85,000/ Monthly Water allowance Tshs. 10,000/ =. Monthly Telephone allowance or subsidy Tshs. 20,0001=., Monthly Medical Allowance Tshs. 20,000/ =. Monthly leave passage for the family (four years) Tshs. 2,400,0001=. 25% gratuity at the end of contract USD 84,000. In my opinion, out of those benefits, the plaintiff is only entitled to gratuity and a one month's salary in lieu of notice. These benefits are payable under clauses 6.0 and e 28 16.01 respectively of the Agreement for , Employment signed by the parties on 3/11/1995. Clause 6.0 provides inter-alia as follows: • Where the Employer terminates the employment in accordance with the pro visions of clauses 15 or 16 hereof the employee will be entitled to receive a gratuity at the rate of 25% of the total: basic salary drawn by him in respect to his services up to the date of such termination." Clause 16.01 provides as f011ows: THE EMPLOYER may at any time, terminate the engagement of THE EMPLOYEE giving three months notice in writing or on paying to the 29 EMPLOYEE one month's salary in lieu of notice." That is all on the fourth issue. The fifth issue which I now resort to is whether the plaintiff was entitled to use the defendant's car after termination of his employment. The answer to this issue is also. simple and straight forward. In actual fact, the plaintiff was not entitled to use the defendant's car after termination of his Employment Contract. All the same, the plaintiff denied to have used it after termination of his contract and I have no reason to disbelieve him. Let me now consider the sixth issue as to whether the plaintiff is entitled to general damages. The reasons for his claim of general damages are contained at paragraph 9 of the plaint which reads as follows and I quote:.- I 30 cc That the involuntary and unfair termination of the plaintiff as averred herein above has had adverse effect upon the plaintiff both socially and financially and the plaintiff claims Tshs.. 300 Million as general damages." Although, I agree with the plaintiff that his termination from employment affected him both socially and financially as he could no longer identify himself as an employee of the Social Action Trust Fund and as he could no longer earn a super salary that he was earning before termination of his. employment contract and the fringe benefits he was earning, I do not agree with him that he was unfairly terminated. First of all, there is evidence to show that. the Fund had no capacity to manage and account for its 31 operations. Secondly, there was no funds available for operational expenses. Thirdly, under clause 16. 1.of his contract of employment which he signed, his contract of employment could be terminated at any time something which he knew or was supposed to know. I do not think therefore that. he deserves general damages. The last issue to be determined is what reliefs are the parties entitled thereto. In my opinion, apart from being entitled to 25% gratuity and a one month's salary in lieu of notice which the plaintiff is entitled to be paid by the defendant as stated herein, he is also entitled to be paid by the defendant repatriation exprenses by air passage from Dar es Salaam to his place of domicile for himself and his dependants just as provided for under clause 16.04 of the Agreement for employment. The plaintiff is also entitled to 32 be paid interest on the decretal sum at court rate from the date of filing this suit until full payment. I now proceed to consider the defendant's counter - claim made in paragraphs 13 to 16 of the 2nd Amended written statement of Defence. There are two main claims raised by the defendant in these paragraphs. One is a claim of USD 12,000 being a balance of Housing Allowance of USD 24,000 which had been advanced to the plaintiff for payment of house rent at a rate of USD 2,000 per month. This claim is based on the fact that although the plaintiff was advanced by the defendant USD 24,000 as Housing Allowance, he only worked with the defendant for six months only. In my view, I think the defendant should have relinquished the claim of USD 12,000 against the plaintiff. When his contract of Employment was terminated, he was shocked and he could not retrieve the rent he had paid to .1 33 the Land Lord of the house he was occupying. He could not get alternative accommodation immediately after termination of his contract of Employment. He needed some grace period for obtaining alternative accommodation. I hold therefore that the defendant's counter claim of USD 12 1 000 is not equitable and I disallow it. Another claini is for a total of USD 10,780.00 for the use and retention of motor vehicle with reg. No. TZH 5716 make Land cruiser for the period of 90 days from the date of termination of his employment contract to 9th May, 1996 when he handed it over to the defendant. Counsel for the defendant Mrs. Rwebangira put this particular claim at a commercial rate of hiring a similar vehicle which is USD 110 per day for the whole period of 90 days.. The plaintiff did not deny to have retained possession of the said Motor 34 vehicle for the whole of that period but he says that he was not using it. The question here is whether the plaintiff had any justification for retaining the defendant's motor vehicle after termination of his Employment contract. I think he had some justification in doing so. First of all, when his contract of employment was terminated, he was puzzled. He doubted the powers of the Appointor for directing him to hand over the motor vehicle keys to Ms Winnie Bomani and in his mind, he thought that the Appointor had wrongly exercised his powers by directing him to do so.. In fact, before handing it over to Ms Winnie Bomàni, he was awaiting for a letter from the Board of trustees which had the powers to dismiss him as provided for by Section 7.2.1.1. of the Trust Deed. Under such circumstances, he cannot be blamed for refusing to hand over the defendant's motor vehicle in issue to Ms. Winnie Bomani for the period he retained it and he cannot be held liable for payment of I ö 35 any costs for retaining it. At any rate, the plaintiff told the court that he was not using it and as I have already mentioned, I have no reason to disbelieve him. I hold therefore that the defendant's counter - claim of a total sum of USD 10,780.00 is not equitable as well and I disallow it. All in all, this suit has partly failed and partly succeeded. I therefore order that each party should bear its own costs. - A •.-' A. Shangwa s;.,. JUDGE 30/4/2010 (p 36 Delivered in open court this 30th day of April, 2010 in the presence of the plaintiff and his Advocate Mrs. Kato and in the absence of Mrs. Rwebangira, Advocate for the defendant. - •S \ A-• A. Shangwa 55 IPe JUDGE 30/4/2010-