[1999] UGHC 47

# **1N THE HIGH COURT OF UGANDA AT FORT PORTAL CIVIL SUIT NO. DR. MFP. 11 OF 1998**

PETERKATURAMU PLAINTIFF

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AGRI - INDUSTRIALMANAGEMENT AGENCY LIMITED DEFENDANT

#### BEFORE: (THE HONOURABLE MR. JUSTICE J. B. A. KATUTSI)

# **JUDGEMENT**

**^I 15** By his plaint dated the 6th ofJuly, 1998 plaintiff sued the defendant an Industrial Management Agency claim shs. 6,566,391/= said to be payment ofredundancy. It is ofnote however that plaintiffdoes not disclose how and when this so called redundancy arose. The pleadings are completely silent on the issue. There is an annexture to the plaint which is a memo from the Administrative Officer ofthe defendant detailing the benefits to be extended • to the plaintiff. Item six ofthat memo shows that plaintiffentitled to redundancy pay (nine months salary calculated shs. 6,566,391/=) which he now claims. The Memo is in the following terms:-

> "I have consulted with U. T. G. C. (Administrative ManagerMr. Kachope) and ^I have been advised that ifMr. Katuramu's benefits calculations is to be based on EU/UTGC redundancy terms, then the following calculations should apply. Not that (he memo talks o fredundancy terms.

Thc defendant Agency entered a written statement ofdefence. By paragraph 4 thereofdefendant averred as follows:-

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"Regarding paragraph ³ ofthe paint the defendantshall aver that no redundancy payment is due to the plaintiffin the alleged sum or otherwise because the plaintiffretired and was given retirement benefits and redundancy was never applied to him".

^I he plaintiffwas an employee ofthe defendant agency as a group Manager. He had worked in that capacity for five years. Before that he was employed by UTGC. According to plaintiffhe was asked by Agency to retire. He was paid shs. 5,000,000/= ( five million). But he was not paid redundancy package which was calculated at shs. 6,566,391/= (six million five hundred sixty six thousand, three hundred ninety one). This is the money at the centre ofthis controversy. He examined Augustine Bafaki Kayongo who was at the time the company secretary ofthe defendant Agency. In his evidence Kayongo stated that in 1996 plaintiffwas involved in an accident in which he was badly injured and the agency decided to retire him. He was as such entitled to retirement benefits. Plaintiffwas however not retired under the normal terms ofthe agency. It was found out that he had been driving at night in the agency vehicle when he got involved in an accident. The agency therefore decided to retire him. According to this witness, it was noted that plaintiffhad had a long service with the company and ifhe were to be retired under the normal retirement terms ofUTGC or AGRIMAG he would go home with a small package. It was therefore felt that it was not appropriate to retire him under the normal retirement terms/ conditions. It was decided there that he be treated as one who had been retired under redundancy conditions. This would mean that him getting shs. 6,566,391/= ( six million, five hundred sixty six thousand, three hundred ninety one). The financial controller of AGRIMAG refused to abide by this decision.

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Two issues were agreed upon for the determination ofthis Court. These are:-

Whether the plaintiffwas entitled to redundancy payment by defendant. 1.

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Ifso how much is he entitled to. 2.

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In his submission learned counsel for plaintiff argues very vehemently that the financial controller of the defendant agency has no "jurisdiction" to refuse payment of the redundancy payment which payment had been sanctioned and / or agreed upon by the Management. He sought reliance on the utterance of GREER L. J. in JOHN SHAW & SONS (SALFORD) LTD. V. SHAW (1935) 2 K. B. 113 where he said:

"If powers of management are vested in the directors they and they alone can exercise these powers". Learned counsel further sought fortification in the case of BARRON Vs PORTER (1914) 1 ch. 895. Where it was observed and decided that the Board of Directors ultimately has all powers in the Management of the Company. Counsel's argument though attractive is with respect fallacious.

The Board of Directors of any company is enjoined to protect the interests of the company and not to do anything that is injurious to the company. From the evidence of PW3 Kayonga who at the time material to this suit was the Company Secretary of the defendant, was decided that plaintiff be paid redundancy package. He was the Company Secretary who should have advised the Board on what redundancy meant. To my humble understanding " redundancy" requires a diminution in the employer's requirement for employees the conclusion can only be that the dismissal is not due to redundancy: NORTH YORKSHIRE COUNTY COUNCIL v. FAY (1985) 1R. L. R. (C. A.) 247.

It is a fact which appears to be agreed by both parties to this suit that plaintiff was asked to retire because of misconduct involving a Company vehicle. How can he on earth claim redundancy benefits. The law seems to be that upon a claim for redundancy there arises a presumption that the dismissal is by reason of redundancy unless it is proved by some means, not necessarily by the employer, that redundancy was not the primary reason. This presumption in this suit has been rebutted. Plaintiff having been dismissed on account of misconduct has no right to claim redundancy package.

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But even ifthe Board ofDirectors or the Management had decided that plaintiff be paid redundancy benefits, which decision ^I hold was a fraud on the Company, could plaintiffsuccessfully base a claim on that fraudulent decision. The general principles of contract law apply to a creation ofthe contract ofservice, and an agreement ofservice is equally enforceable. And so the ordinary principles of contract law apply here so that to claim remuneration for service rendered does not arise in law, unless in fact thee is an agreement, express or implied, to pay for them. More than a hundred years ago MARTIN, B. said: " an action cannot be maintained for remuneration merely because it may appear to be reasonable". REEVE v REEVE (1985) i. F&F. at P. 280.

Consideration is necessary for the formation of every simple contract. An informal promise made without consideration is not actionable under our law even though the promises may have acted upon it to the detriment. About two hundred years ago SKYNNER C. B. said:

"It is undoubtedly true that every man is by law ofnature bound to fulfil his engagements. It is equally true that the law ofthis Country supplies no means nor affords any remedy, to compel the performance of an agreement made without sufficient consideration; such an agreement is made" nodum pactum exquo non orⁱ tus actio"; and whatsoever may be the sense ofthis maxim in Civil Law, it is in the last mentioned sense only that it is to be understood in our law---------- All contracts are by law ofEngland divided into agreements by speciality and agreements by parol; nor is there any such third class as some counsel have endeavoured to maintain as they are parol, and consideration must be proved. " So even ifthe Board had agreed that plaintiffbe paid redundancy benefits, such an act was gratuitous and conferred no rights on plaintiffto sue for that benefit. The first issue must be answered in the negative.

In case ¹ am wrong on the first issue then the second issue would succeed and plaintiffwould be entitled to shs. 6,566,391/=

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(Six million five hundred sixty six thousand, three hundred ninety one). This suit is dismissed with costs to the defendant.

# Sgd. (J. B. A. TATUTSI) **JUDGE** 30/6/1999

I direct that the District Registrar do summon the parties and read this judgement. Sgd. (J. B. A. TATUTSI) **JUDGE**

30/6/1999

17/8/1999: Parties absent.

Mr. Komunda for the plaintiff. Mr. Mugamba for the defendant.

Judgement delivered in open court. Court:-

> Sgd. (P. R. ONYER) DEPUTY REGISTRAR. 17/8/1999

Right of appeal to Court / of Appeal is explained.

Sgd. (P. R. ONYER) DEPUTY REGISTRAR. 17/8/1999

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#### **THE REPUBLIC OF UGANDA**

### IN THE HIGH COURT OF UGANDA HOLDEN AT FORT PORTAL

#### CIVIL SUIT NO. DR. MFP 11 OF 1998

PETER KATURAMU **PLAINTIFF**

#### **VERSUS**

AGRI-INDUSTRIAL MANAGEMENT AGENCY LTD. ..................................

**DEFENDANT**

#### **DECREE IN ORIGINAL SUIT** $(0. XVIII \text{ rr. } 6\&7)$

THIS suit is coming this 17th day of August, 1999 for final disposal before Hon. Justice J. B. A. KATUTSI in the presence of Mr. Komunda Counsel for plaintiff and Mr. Mugamba, Counsel for the defendant IT IS HEREBY ORDERED and DECREED that;

The suit be dismissed $(i)$ .

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(ii). The plaintiff pays costs of the suit.

Extracted by M/s Kanyunyuzi & Co. Advocates this $2.7\%$ day of ....... $OCE$ 1999.

FOR DEFENDANT.

secretary.

We approve

GIVEN under my hand and seal of Court this $27^{\prime\prime}$ day of $32^{\prime\prime}$ . $2000$

DEPUTY REGISTRAR

**COUNSEL FORPLAINTIF**