Stanbic Bank Ltd v Kiyemba Mutale (Civil Appeal 2 of 2010) [2011] UGSC 32 (6 December 2011)

(CORAM: ODOKI C.J, TSEKOOKO, KATIIREEBE, KITUMBA, KISAAKYE, JJ.S.C) GIVIL APPEAL NO.2 OF 2O1O BETWEEN APPELLANT AND KIYEMBA MUTALE RESPONDENT [Appeal from the dectsion of the Court of Appeal of LJganda. (Mpagi Bahigeine, Engwau and Twinomujuni IJ.A) dated 9,n September, 20O9, in Civit Appeal No.47 of 20o71. T U DGMENT OF KATUREEBE. I SC I have had the benefit of reading in draft the judgment of my Iearned Sister, Kitumba, JSC and I agree with her that this appeal should substantially succeed. I only wish to add, by way of emphasis a few thoughts about wrongful termination of contract. I'here is no doubt that the respondent's contract of employment was wrongfully terminated by the appellant, his employer, The question that 1, THE REPUBLIG OF UGANDA IN THE SUPREME COURT OF UGANDA AT KAMPALA STANBIC BANK LTD : needed to be answered was this: what were the consequences of that wrongful termination. It is trite law that normally an employer cannot be forced to keep an employee against his will. There can be no order for specific performance in contracts of employment. However the employer must be prepared to pay damages for wrongful dismissal, pay for any period of notice stipulated in the agreement, and pay any other benefits, Iike pension dues, that have accrued at the time of the termination. I believe this is well laid down by this courr in the case of BARCLAIS BANK OF UGANDA -Vs- GODFREY MUBIRU SCCA No. 1/1998 and BANK OF UGANDA -Vs- TINKAMANYIRE - SCCA NO. 12 OF 2007. By way of analogy the position in England is stated in HALSBURY'S LAWS OF ENGLAND VoLt6 para 3OS as follows:- "An employee who has been wrongfully dismissed will normally have no option but to accept the employer's repudiation and sue for damages for breach of contract." As for the measure of damages to be given for such a breach, it is stated in paragraph 307 (Halbury's Laws) as follows:- "In the case of a fixed ternt contract, tltis means that the starting point is the remuneration for the remainder of the fixed term; but most contracts of emptoyment are 2 terntinable by notice so that the employee is entitled to recover only the amount of remuneration during the notice period. That remuneration includes wages or salary; including a reasonable amount of any variable such as commission, loss of a vehicle, and other fringe benefits and any loss of pension rights As the action is for breach of contract, not debt, the employee is under a duty to mitigate his loss; and certain amounts must also be ded,ucted from the prima facie measure of damages and adjustment made to reflect the incidence of taxation." The above principles are also cired in CHITTY ON CONTRACTS VoI.2 paragraph 3636 on "DAmages for wrongful dismissal,, In the instant case, the respondent's employment with the appellant was regulated by his contract of employment and the Personnel Policies Manual (ppM). Pursuant to those, he was offered payment of three months in lieu of notice. He was offered his accrued pension. The High Court also awarded him Shs. 2,000,000/= as general damages for wrongful dismissal and Shs.2,000,000/= as exemplary damages for the manner by which he was dismissed. The bone of contention is the award of Shs.115,0S6,960/= by the Court of Appeal as terminal benefits which was based on what the appellant would have earned had he not been dismissed and retirement. had instead opted for early or voluntary With the greatest respect, I think both the High Court and the Court of Appeal were in error here. First it is mere speculation as to what the appellant would have done if he had not been dismissed. He may not have opted for early retirement, as indeed he had not. Secondly, the proposals for employees who took early retirement was a special scheme for those persons. Once his contract of employment was terminated, albeit wrongfully, the respondent could no longer be treated as an employee of the appellant. As indicated above he was entitled to his payment in lieu of notice, his accrued pension, and damages for wrongful dismissal. In that regard I agree with the submissions of counsel for the appellant that the appellant could only be awarded what was in his contract of employment. That contract comprised his letter of appointment and the Personnel Policies Manual. 4 I As for the general damages, the High Court awarded Shs.2,000,000/=. The respondent did not appeal against rhe inadequacy of that award. It appears to me that both the High Court and the Court of Appeal were anxious to award a substantial sum of money to the respondent, but with respect, totally rnisdirected themselves as to the principles upon which such compensation could be based. ) In his lead judgment, Twinomujuni, JA, states in the very first paragraph that "the respondent had sued the appellant for special and general damages for wrongful dismissal" yet throughout the judgment, the learned Justice of Appeal does not discuss the principles upon which the responclent should be awarded what he sued for, i.e. special and general damages. Having reached the conclusion that ,,the respond.ent was therefore unlawfully dismissed outside the terms and condition of his employment," the learned Justice then went on to state:- "The fact that the appeilant dismissed the respondent ultra vires the contyact of employment makes it only difficult to determine the nature of the remedy he is entitled to receive." Again, with great respect, this, in my view, was a misdirection as to the law, since the law has been clearly laid down by this court in several decisions and as stated in various legal texts as indicated. Having found that the appellant was wrongfully terminated, the court should have proceeded to make an award of general damages which are always in the discretion of the court to determine. Indeed the learned Justice cited Article 126(2) (c) which provides for the courts to ensure that adequate compensation is awarded to victims of wrongs. However, there is an important qualification in that Article, which sometimes courts tend to forget. The Article states: 5 126(2) "In adjudicating cases of both a civil and, criminal nAture, the Courts shall, apply the following principle: (c) adequate compensation shall be awarded to victims of wrongs." (emphasis added). Clearly, the court must address itself to the principles of law applicable, and then, within the law, determine the measure of adequate compensation. It cannot be based on mere speculation In my view, that adequate compensation would have been a payment in lieu of notice, a measure of general damages for wrongful dismissal, and payment for accrued pension rights. The High Court could have awarded substantial general damages but in its discretion it chose to award only Shs.2, 000,000/=. The respondent did not even see fit to appeal against that award. Strangely, the Court of Appeal did away with general damages altogether. The court, having proceeded, wrongly, on the premise that it could award terminal benefits based on what the respondcnt would have earned if his contract had not been wrongly terminated, rejected the award of general and exemplary damages which had been made by the High Court. The learned Justice states, at page 15 of the judgment: subi ect to the law. 6 "As I have been gaided by retrenchment payments, no general damages or exemplary damages are awarded..', The respondent apparently accepted this position as he made no cross-appeal against an obviously erroneous position. with regard to terminal benefits, the authorities indicate that the respondent could only be entitled to what had accrued to him under his contract. He could get payment in lieu of notice, which was offered, and he could get his accrued pension, which was also done. This is because the termination, even though wrongful, takes effect and the employee is no longer in the employment of the employer as to demand for other benefits, let alone those that could be paid to other employees who remain in employment. In BARCLAYS BANK OF UGANDA _Vs- MUBIRU (supTa), the employee had been awarded by the High Court such items as transport, medical, luncheon and entertainment allowances which he claimed he wourd have earned. In rejecting these awards, this court, (Kanyeihamba JSC) stated:- "The trial judge's decision that these allowances were payable from the period the plaintiff was dismissed up to the date when he would have retired from entployntent of the appellant has no foundation in law.,, 7 il This position was reiterated in the TINKAMAI'|IIRE case where Kanyeihamba, JSC, stated:- "The contention that an employee whose contract of employment is terminated prematurely or iltegally should be compensated for the remainrler of the years or period when they would have retired is unattainable in law. Similarly, claims of holidays, Ieave, Iunch allowances and the rike which the unlawfurly dismissed employee would have enjoyed had the dismissal not occurred are merely speculative and cannot be justified in law. I would confine the compensation for the unlawful dismissal of the appellant to the monetary value of the period that was necessary to give proper notice of termination which is commonly known in law as compensation in lieu of notice.', In the case of VINE -Vs- NATIONAL DOCK LABOUR BOARD [1956] 1QB 658, cited with approval by this court in DOREEN RUGUNDU -Vs- INTERNATIONAL LAW INSTITUTE, Supreme Court Civil Appeal No.8 of 2005, Jenkins L.J stated:_ "It has long been well settled that if a mAn employed under a contract of personal service is wrongfully disntissed, he has no claim for rernuneration due und,er the contract after rep udiation. His onlv mon ey claim is or danta CS r havin been revented t' ont earnin is sole his remu neration. H monev claim is for d amaaes 8 a and he must do everything he reasonably can to mitigate them." (emphasis added). The Court of Appeal seemed to appreciate the position of the law when, Twinomujuni, JA, stated at page g: "Clearly the employment of the respondent ended or was terminated on 17.10.1997 and no further payment can be ordered against the appellant." However, the Justice then proceeded to apply wrong principles based on speculation when he stated, at page. 11, as follows:- "It is quite correct for the appellant to say that the report on staff benefits dated 16,h October 19g7 was not binding on them. However, to the extent that it was a proposal for the terminal benefits for members of staff who would be retrenched at a future date, they are a relevant guide as to how much the appellant was worth to the Bank if he elected to be retrenched during or after 1997. The appellant who was dismissed without any misconduct would have been entitled to retrenchment benefits if he applied to do so. What he wortld have received, as terminal benefit is a good guide as to how much he should get as terminal benefits on unlawfully being dismissed." 9 ,.) . On this basis, the court proceeded to award to the respondent on such items as salary for 12 months, 4g months basic salary as a Long Service Award, etc, all totalling to Shs.115,056,960/=. I am of the firm view that this award had no basis in law and cannot stand. The court then states:- "The respond.ent has not made out a case for special damages to be paid with interest of ZS%. I would order interest on this payment to be 15% from the date of filing the suit till payment in fuII." It is not clear to me whether the court found that a case for special damages had been proved at all, but that it did not deserve interest of 25%. It is trite law that special damages must be specifically pleaded and proved as having been suffered by the person claiming them. Special damages cannot be based on speculation. If the award of Shs.115,056,960/= is meant to be the special damages, then it has no foundation in law or in fact in this case. First, the respondent had bcen dismissed and the dismissal had taken effect. Therefore one cannot talk of his worth to the same employer that dismissed him. Secondly, voluntary retirement had been introduced in 1993. As of 1997 when he was dismissed, the respondent had not applied to join that scheme. Clearly, therefore, the court was merely speculating. 10 11. I' I would therefore agree that this appeal succeeds substantially. I have one matter that I must comment on. I think that the respondent could have been awarded substantial general damages for the wrongful termination of his employment, taking into account his status, the manner of the termination and the way he was handled by the appellant. The High Court did not indicate whether it took all that into account in exercising its discretion to award Shs.2,000,OOO/_ as general damages. As already observed, the respondent did not challenge the adequacy of that award on appeal, and in fact the Court of Appeal disallowed the award of general damages and exemplary damages. I think the Court of Appeal erred in disallowing the claim for general damages, which in fact are the damages that shotrlcl have been awarded under l.he law. In my view the order of the High Court that the responcle't be awarded the general damages and exemplary damages should be restored. May be the respondent deserved more in general damages but this matter was not canvassecl by both counsel in this court. I ant constrained not to interfere with the discretion of the trial Judge. I also agree that each party should bear its own costs. 11 Dated at Kampala this day o 2009. Bart M. Katureebe Justice of the Supreme Court 72 fuz2.^--*-Z---"t _t t,rl THE RE,PUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT KAMPALA (CORAM: ODOKI, C.J., TSEKOOIQ, KATUREEBE, KITUMBA, KIS.,LAKYE, JJ.S.C.) CIVIL AI'PEAL NO. 02 OF 2OIO BETWEEN STANBICBANK LTf). :::::::::::::::::::::::::::::::: APPELLANT ANI) KIYEMBA MUTALE IIESI'ONDENT [Appeolfrom the decision of the Court of Appeol of Ugundo ( Mpagi-Bahigeine, Ettgx,au ond Tr+,ittotttujutti, JJ.A) dated 9'h Septctnber , 2009, in Cit,il Appeal No. 47 of 20071 JUDGMENT OF DR. B. KISAAKYE , JSC I also believe that this is a case where the Respondent deserved to he awarded more in general damages for the wrongful terrnination of his employment, given his long service. However, since the respondent did not appeal to the Court of Appeal against the arvard oldamages which the trialjudge made, this court cannot interfere with this Award. I have had the benefit of reading in draft thc judgment of my Ieamed sister, Justice Kitumba,.lSC and the concurring judgnrent of my learned brother, Justice Katureebe, JSC. I concur with her that this appeal should succeed. I also agree with the orders that she has proposed. I just rvish to add a few comments. ,1, The othcr point I wish to add concerns the current position of the larv on the rights of thc cmployccs with respect to termination of their services by their employer. The position stated by my learned sister, Justice Kitumba, and 'uvhich applies to this case under consideration is that the employees' only rights in a case of unlawful termination of his services was for payment in licu of notice if no notice was given hy the ernployer, any accrued dues for salary, other entitlements, outstanding leave and in descrving cases, general damages for wrongful temrination. In no circumstances could thc court order reinstatement of an employee who was rvrongly dismissed. The Employment Act, 2006 has since introduced several changes in thc law with respect to procedures that an employer is required to follow belbre terminating the services of his employee. 'l'he Act also provides for, among others, situations where reinstatement of an employee may be ordered. Therefore, courts hearirlg cases arising after the coming into furce of thc Employment Act 2006 will have to ensnrc that cmployers observed the law and proper procedure when terminating the services of their employees as provided for under the Act and whether they complied with the orders as may have been issued by the Labour Officer. #, 20t1. Datetl at Kampala this ay of v) .Q, DIT. ESTHER M. KISAAKYE JUSTICII OF THE SUPREME COURT I THE REPUBLIC OF UGANDA IN IHE SUPREME C(ruRT OF I.JGITNDA ATIGIIIPAIA [Coram: Odoki, CJ., Tselcooko, Katureebe, Kitumba & Kisaalye, JJSC.J Ciwl Appeal No. 02 of20l0 STANBIC BANK LTI) APPEI.I-,\NT KTYEMBE I\{UTALE RESPONDENT {Appeal fom the Judgrntnt of .the coyt of Appear at KamJxra (M1ngi-Bahigeine, Byamugisha ard Nshimye JJA ) dated 04 September, 2009in iivii)ppal No li of 2007.) JUDGIIE\IT OF IISB(X)KO. JSC I have read in draft the lead judgrnent of my learned. sister the Hon. Lady Jr:stice CNB l{iturnba, JSC and the support judgrnent of Katureebe, JSC- r agree that the appear shourd substantiary succeed. I agree with the ord.ers proposed by rny learned sister. Delivered at I{arnpala this 6* day o 2017. JWN,.,Tsekooko. Justice of the Supreme Court. Pg. I oJl \ 1 THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT I(AMPALA (coRAM : oDoKr *,;::f;f;"#If*or, KrruMBA, CIVTL APPEAL NO.O2 OF 2O1O BETWEEN STANBIC BANK LTD : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :APPELLANT AND KIYEMBA MUTALE:::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT [Appeal from the decision of the Court of Appeal of Uganda. (Mpagi Bahigeine, Engutau and Tuinomujuni JJA) dated 9th September, 2009, in Ciuil Appeat No 47 of 20071 JUDGMENT OF KITUMBA JSC. This is a second appeal to this court from the judgment of the Court of Appeal which virtually uphold the decision of the trial judge. The facts leading to this appeal are quite straight forward. They were agreed upon by both counsel at the scheduling conference in the Court of Appeal and are as follows: The respondent is a lormcr staff of Uganda Commercial Bank (herein after referred to as "UCB"). He joined the service of UCB on 3'd March 198 1. Sometime in 1993, UCB embarked on restructuring its operations. By circulars CMD/FIN/6.9 dated 26th April, 1993 and CMD/FIN/6.7 datcd 26,h April 1994 (herein aftcr referred to as "the I t t0 15 25 30 .10 l5 a 20 ) a circulars)". UCB invited its staff who wished to voluntarily terminate their services or opt for early retirement to submit applications. The staff who successfully applied for voluntary termination of their services/early retirement were paid a compensation package as set out in the circulars. During the restructuring of the bank there was a report on staff benefits dated 16th October, 1997. The terms of that report were very similar to the circular with regard to members of staff who would in future apply for early retirement. On 22"a October 1997, the respondent's employment with UCB was terminated with immediate effect. The respondent claimed he was wrongfully dismissed and thus filed H.C.C.S No. 1225 of 7999 against UCB, inter alia, for recovery of terminal benefits and damages for wrongful dismissal. UCB denied the respondent's claims and counterclaimed for rent arrears in respect of the respondent,s continued occupation of its house subsequent to the termination of his employment. On 22"d June 2004, the appellant applied to be substituted for UCB as defendant in the suit. The application was allowed and an order made accordingly on 31"' August, 2004. During the trial the following issues were framed for determination: 7) Whether the tennination of the plaintiff was wrongful. 2) Whether the plaintiff is entitled to retnedies. 3) What rernedies if ang is the defendant entitled to. The trial judgc answered all the issues in favour of the respondent and made the following findings and orders: 7. The purported dismissal of the plaintiff bg the defendant was unlauful. ) l0 l5 20 25 30 35 ) ) 2. The termina.l benefits should be paid to the plainttff and. calculqted in the m.o,nn'er qnd rate of beneftt whtch accrued to the retrenched staff members of the defendant Bank excluding the 3 months pag in lieu oJ notlce. l0 3. Awarded Shs 2,OOO,OOO/= as general d.amages. 4. Awarded o.,f Shs. 2,OOO,OOO/= exemplary dannages and 15 5. Costs of the suit. 20 The appellant was dissatisfied with the judgment of the trial court and appealed to the Court of Appeal on the six grounds At the scheduling conference in the Court of Appeal counsel for both parties agreed that the issues to be determined from the grounds of appeal were as follows: ,) 7. Whether the respondent wq.s entitled to terminal benefits. 2. If so, what is the quantum? 25 3. Whether the respond.ent was entltled. to pagment under circulars CMD/FIN/6.9 dated 26th April 7998 and. CMD/FIN 6.7 dated 26th April, 1994. 4. Whether the respondent,s claimfor pagments betueen lgg7 and October 1999 was legitimate. 30 The court of Appcal held that the respondent was wrongly dismissed and was entitled to tcrminal benefits amounting to Shillings one hundred fifteen million, lifty six thousand, nine hundred sixty only (115,056,960/=). Interest on the above at the rate of l5%o from the 3s date of the filing the suit till payment in full. The court of Appeal declined to award general or exemplary damages on the ground that it had been guided by the retrenchment payments in reaching the 5 award. The Court of Appeal held, however, that the respondent was not entitled to payment under the retrenchment circulars CMD/FIN 6.9 dated 26th April 1993 and CMD/FIN 6.7 dated 26th April, 1994.The respondent was awarded costs of the suit in both courts and interest at 15% from the date ofjudgment till payment in full. The appellant appealed against the judgment of the Court of Appeal and filed its appcal to this court on the following grounds: 1. Having found that the respondent's terms of emplogment did not mo,ke provision for pagment of terminal beneftts to the Respondent, the learned Jttstices of Appeal erred in lqut and, failed to properlg eualuate the evidence on record therebg erroneouslg holding thqt the respond.ent uqs entitled. to terminal beneJits. 2. The learned Justices oJ Appeal erred. in laut and failed to properlg eaaluate the evidence on record therebg erroneouslg awarding the Respond.ent the sum of Ug Shs. 775,056,96O/= as terminal benefits. 3. The learned Justices of Appeal erred in laut and in fact in awarding interest of 75o/o from the date of Jiling the suit till pagment in full uthereas there wa,s no cross appeal against the q.ward of interest before the High Court. Counsel for both partics namely, M/s Kateera and Kagumire & Co Advocates, lor thc appcllant and M/s Nile Law Chambers, for the respondent lilcd writtcn submissions. In their submissions both counsel argued grounds '1. and 2 togcther, then ground 3 separately. In this judgment, I r,l,ill consider the grounds in the same manner. l0 l5 20 25 l0 + a -5 l0 l5 20 25 30 The complaint by the appcllant's counsel in grounds 1 and 2 is that there was no evidence to warrant the hnding by the Court of Appeal that the appellant was entitled to terminal benefits. The appellant's counsel contended that the Court of Appeal found that the respondent's terms of service with UCB were those spelt out in his letter of appointment dated 30th March, 198 1 and the Personnel Policies Manual (PPM). The same court found as a fact that the respondent's dismissal did not fall among the categories of terminations for which tcrminal benefits were payable. There was, therefore, no justification for the Court of Appeal to hold that the respondent was entitled to terminal benefits. The appellant's counsel citing Barclags Bo.nk of Uganda Vs Godfreg Mubittt SCCA JVo. 1/7998, argued that the Supreme Court pronounced itself on dismissals, where it is stated that where a contract is governed by written agreement between the employer and employee, termination of employment services to be rendered will depend both on the terms of the agreement and on the law applicable. According to counscl, this clearly shows that the Court of Appeal was bound to look at the lettcr of appointment, PPM and the law and not elsewhere, Iet alonc have recourse to the terms of service of other employees in resolving the issue. I entirely agree with the submissions by counsel on his point. Counsel argued further that the finding by the Court of Appeal that all "etnployees emploged on similq.r tertns qs the respond.ent are giuen terminal benefits when theg leaae the banl"k, is not borne out by the evidencc on rccord. No witness testilied before the High Court to that effcct. In counsel's view, the Court of Appeal found ) difficulty in disposing of the issue as to the quantum of the terminal benefits the respondent was entitled to because it was not in the respondent's terms of scrvice. The Court of Appeal thus considered the report on staff bencfits and the circular dated 26th April 1993 as a guide on the quantum of terminal benefits to be awarded. The learned Justices of Appeal speculated on what the respondent would have earned if he had not been terminated and subsequently applied for voluntary termination/retrenchment. Counsel vehemently argued that, there is no such remedy as termina-l benefits on being unlawfully terminated under the respondent's terms of service. Termination without notice is compensated by payment in lieu of notice and in some cases an award of damages where no such payment is made. Appellant's counsel criticized the Court of Appeal for holding that it had been conceded by both parties that the respondent's termination of employment was unlawful. In reply, counsel for the respondent fully supported the findings of the learned Justices of the Court of Appeal that the respondent was dismissed outside the terms and conditions of his employment. The respondent's counscl contended that an employee, who is unlawfully dismissed, should, as in this case, be compensated adequately in accordance with the law. 'lhe Justices of Appeal were right in holding that the court must look at the PPM and elsewhere and see how other employees leaving the bank without any misconduct on their part are treated. The appellate court did not look outside the scope of PPM, letter of appointment, the law and practice of the appellant. Furthermore, there is nothing in Mubittt's case (supra) that bars the t0 r5 20 25 30 6 ) 5 course of action that the learned Justices took. Counsel argued that reliance on Mubiru's case would be misconceived because the circumstances of both cases are different and the facts are, therefore, distinguishable. Counsel submitted that the appellant's erroneous brief that the respondent was terminated on disciplinary grounds has influenced its conclusion that the respondent is not entitled to an award of terminal bcnelits. In rejoinder, counsel reiterated his submission that the award of terminal benefits is contractual whereas the award of damages for breach of contract is within the discretion of the court as compensation for wrongful dismissal. He submitted that the respondent had already received money in lieu of notice, money for leave not taken and accrued pension. The trial judge had also awarded him damages in compensation for wrongful termination. Appellant's counscl contended that once a contract of service has been terminated, though wrongfully, the employee has no right to claim any payment under the contract. In support of that submission he relied on Rugudu Vs Internationq.l Law Instltttte [2OO7] 2 E,A 444. According to the record of appeal I am of the considered opinion that it was conceded by counsel for both parties at the hearing of the appeal that the respondent's dismissal was wrongful. Consequently, it was not framed as an issue during the hearing of the appeal. The argument by the appellant's counsel in this court that the wrongfulness of the dismissal of the respondent was not conceded is an after thought. The respondent's terms of the contract with the appellant were spelt out in the letter of appointment dated 3.d March IO l5 20 25 i0 7 ) 5 1981 and the Personnel Policies Manual (PPM). There is no dispute that the respondent was dismissed summarily. This was not in accordance with Clause 8.01 of the PPM bccause the letter of dismissa-l never alleged that he had committed a serious crime to attract summary dismissal. The appellant's counsel does not submit that the respondent was dismissed under the clause. The respondent was, therefore, unlawfully dismissed outside the terms and conditions of his employment. l0 In his judgment Twinomujuni JA, examined the provisions of the 15 PPM. He stated that the PPM does not envisage terminal benefits for wrongful dismissal. Clause 8.O2 provides benefits for those who are dismissed from thc bank for misconduct which does not warrant summary dismissal. Clause 8.04 of the PPM provides benelits for those who have to leave the bank when a reduction of staff becomes 20 unavoidable and havc to be declared redundant. Clause 8.05 provides terminal benelits for those whose services arc terminated for health reasons. According to the learned Justice of Appeal, the appellant did not envisage that they would need to act so arbitrarily as to dismiss an employee without any hearing, notice or summarily 25 without any misconduct. He was of the view that, since all employees of the appellant are employed on similar terms as the respondent and are given terminal benefits the respondent is not an exception. He held that the respondcnt was entitled to terminal benefits. The other Justices of Appeal concurred with that holding. 30 The position of the law is that an employer may terminate the employee's employment for a reason or for no reason at all. However, the employer must do so according to the terms of the contract li ) 5 otherwise he would suffer the consequences arising from failure to follow the right proccdure of termination. A termination is effective even when wronglul bccause courts can not forcc an employer to keep an employee for evcr. The employer would have to contend with a claim for damages for wrongful dismissal. Thus it was statcd by Kanyeihamba JSC (as he then was) in Barclags Bank otUganda Vs Godfreg Mubiru in Civil Appeal No I of 7998 "In mg opinion, where ang contract of emplogment, like the present, stipulates that a pqrtu mag terminate it bg giving notice of a speciJied period, such contract co'rz be terminated bg giving the stipulated. notice for the period. In default of such notice bg the emploger, the emplogee is entitled to receiue pagment in lieu of notice and where no period for notice is stipulated, compensation utill be q.utarded for reasonable notice which should hque been giaen, depending on the n@ture qnd durqtion oJ emplogtnent. Thus, in the case of Lees u Arlhur Greaues Ltd, (1974) I.C.ll. 501, it uto's held that payment in lieu of notice can be uiewed as ordinary giuing oJ notice.... The right of the etnploger to terminate the contract of service, whether bg giuing notice or incurring a penaltg of paging compensation in lieu of notice for the duration stipulated or implied bg the contract cannot be fettered bg the courts. An emplogee is entitled to Jull compensqtion onlg in those c@ses where the period of service is Jixed. utithout provision for giving notice." I would also likc to notc that the respondent was wrongfully dismissed from thc appcllant's employment in an arbitrary manner. 10 l5 20 25 i0 9 l The appellant Bank was uncooperative with the Inspectorate of Government, a constitutional body, which was investigating the circumstances that led to the appellant's dismissal. The letter lrom the Inspectorate of Government and the recommendation from M/S Sebalu & Co Advocates were put on record after the court had granted the application by counsel of discovery of documents. Thc Inspectorate of Government's letter is dated l"t October, 1999 and rcads: The Chairman Board of directors Uganda Commercial Bank Limited P.O. Box 973 KAMPALA TERMINATION OF SERVICE OF T.K. MUTALE AND S. ANGERET The above- mentioned persons, who were formerly employed by Uganda Commercial Bank in the Legal Service Department until October 1997, have lodged a complaint with this office for wrongful termination of their services. This oflice carried out inquiries and came out with observation outlined below: i) The two former officers were not given an opportunity to be heard, nor were they informed about the grounds of their termination. Hence, the decision to terminate their services was seen to be arbitrary and unfair, ii) Although the Bank has a Staff Commendation and Disciplinary Committee, the officers were not subject to its procedure. iiil The Bank regulations outline breaches and provide for notice of termination in line with the disciplinary procedure. However, no clear guidelines for terminal benefits are given apart from payment where notice of termination is not given. This, however, does not cater for full benefits. ivl Although it is alleged that investigations into the case carried out by the Bank Management as well as an independent external team, the Bank has not provided proven facts/evidence against the former officers to justify the decision to terminate their services. Our recommendation therefore, is that the two former officers should be paid full terminal benefits. l0 IO l5 20 25 30 l5 40 .+5 50 5 A more detailed Report of findings is herewith forwarded. D.C. Psomgen DEPUTY INSPECTOR OF GENERAL OF GOVERNMENT l0 c.c. The executive Director, PERD The Managing Director Uganda Commercial Bank l5 20 " VCB Chief Manager/Legal " Mr. Mutale and Mr. Angeret The recommendation from M/S Sebalu & Lule, Advocates is addressed to the Chairman of Board of Directors. It was written as a report after examining all the allegations which had been made against the respondent. The following is its conclusion: 25 uBg and large, the atlegations which I haae exqnined did not, in mg uieur, justifg termination surnm,o,ry or with notice. The FLO haae been able to giue explanations which appear to me to be satisfactory. 30 In the ouer zealous execution oJ their seruices or due to a wrong judgment the FLO may at tirnes haae appeared. to hqae acted more in faaour oJ the other side rather thqn as Bq.nk's lawgers. This in the Jinal result, in mg view, did not justifg summqry dismissal. I would recommend, pagment of terminal beneJits." 35 From the abovc cxtracts one notcs that the IGG recommended that the respondent should bc paid his terminal benefits. A similar recommendation was madc by Ms Sebalu and Company Advocates who were instruclcd b-y thc appellant to look into the issues regarding the respondent's dismisszrl lrom employment and give legal advice to 40 the bank. The rccommcndations by both the IGG and Ms Sebalu & Co II ) Advocates, howevcr, did not give the legal basis for payment to the respondent of tcrminal benefits. A careful perusal of both recommendations reveal that the reason why the respondent should be given terminal benefits is that he was arbitrary and unfairly dismissed. Thc two recommendations seem to equate terminal benefits to damages which is not correct according to the principles of the law of contract ol cmployment. It is my considercd vicw that there is freedom of contract and courts cannot enforce specilic perlormance of a normal contract of service. The employee, howevcr, expects to be protected from unfair and unwarranted breachcs of the contract of employment by the employer. When an employee is wrongfully terminated, the court should use its powers under article 126 (21 (c) to award adequate compensation. The respondent is a professional who headed the legal division of the appellant for sevcntcen years. There were no adverse reports about him. Dismissing him in such a manner is inequitable and courts of law should not allow it to go without adequate compensation. The position of the law on unlawful and unfair dismissal was stated in Bank of Uganda Vs Betty Tinkamanyire SCCA No 12 of 2OO7. "It is trite that, a court of laut should not use its powers to force an emploger to retq.ke an efitplogee it no longer wishes to continue to engage. Houteuer, depending on the circumstances, an emplogee who is unfairlg or unlautfully dismissed, as in this case, should be compensated adequatelg in accordqnce with the lqwt'. The facts of that casc arc very similar to the instant appeal. l0 l5 20 25 i0 t2 5 In that case, the rcspondcnt, a lady who had worked for the appellant for several years had hcr employment abruptly terminated by the Bank. On her rcturn from a study tour of the German Central Bank, she found her succcssor sitting in her office. None of the Bank officials gave hcr an cxplanation. On the same day her lctter of termination was written, a notice was pinned on the notice board reading that staff who are incompetent, poor time managers, alcoholics, thieves, fraudsters and insubordinate would have their serviccs terminated. This court awarded hcr aggravated damages of shs. 1O0,000,000/= because she was grcatly embarrassed and inconvenienced by being classified arnonfl staff of bad character. Additionally, she was given all her pension rights because the court found it iniquitous for her to lose any of her pension rights. When this appeal was before the Court of Appeal the issue of damages was not addresscd by both counsel. All their submissions were on terminal benefits. This might have confused the Justices of Appeal on he role and thc extcnt of the powers of the court in assessing compensation for wrongful dismissal. Instead of considering the appropriate quantum of damages in order to compensate the respondent, they awardcd him retrcnchment/early retirement benefits l0 l5 20 :10 li The instant appeal bcfore this court would be a suitable case for an award of substantial damages. The learned trial judge awarded him general damagcs amounting to shs 2,OOO,OOOI= and exemplary 2s damages of shs 2,OOO,OO0/=. ) which he was not cntitlcd to as his contract had already been terminated. Hc n,as no longcr an cmployee of the appellant. Twinomujuni in his lcnd judgment stated: "It is quite correct for the appellant to sag that the Report on Staff BeneJits dated 76th October, 7997 uto's not blnding on them. Howeuer, to the extent that it was a proposalfor terminql beneJits Jor rnernbers of staff who would be retrenched qt q future date, theg are releuqnt as guide as to hout rnuch the appellant was worth to the Bank if he elected to be retrenched during or afier 1997. The appellant who was dismissed without ang misconduct would hque been entitled to retrenchment benefits if he applied to do so. What he would haue receiaed, as terminql beneJit is a good guide q.s to how much he should get as a terminal benefits on unlawfullg being distnissed." In conclusion hc statcd thzrt: "As I haae been guided bg retrenchment pagment1 no general damages or exemplarg damages are qwarded". It is obvious from the above quotation that the Court of Appeal did not at all consider the award of damages of any category to the respondent. It is trite that whcre a contract of the employment has been terminated, thc employee has no right to claim payment under the contract. l0 l5 z0 25 30 This was statcd by this court finkamangire (supra) and in Instit;.tte (supra). in Bank of Uganda Vs Bettg Rugudu Vs Intentatlonal Law l.l ) In the case of Bank of tlganda Vs Bettg Tinkannangire,(Supral the respondent hacl bccn ar,r,ardcd, intcr alia, commutcd pension she would have reccivcd hacl hcr tcrmination been lawful and the number of months she would havc worked up to retirement age. This court held that such awards arc unlau.lul and Kanycihamba JSC (as he then was) statcd in his lcad judgmcnt at P.7 thus; "The contention that an emplogee whose contrqct of etnplogment is terminated prematurelg or illegallg should be compensated for the remainder of the Ueqrs or period uhen theg would have retired is unaltainable in lqw. Sitnilo,rlg' claims of holidags, leaue, lunch allowances and the like uthich the unlawfullg dismissed employee utould haae enjoged had the dismissal not occurred are merelg speculatiue and cannot be justifted irt lq.ut". In the case of Rugundu Vs International Law Institute (Supra), the appellant whosc contract was tcrminated bclore it commenced claimed for thc moncv ar-rd othcr bcnclits she would have earned from the contract. 'lhe court hcld that an employce whose contract is terminated reccivcs nothing in rcgard to the contract. This court quoted with approval thc lollowing statcment from Vires Vs National DockLabour Boqrd 119561 1QB 658. "It hos long been settled that if q rrrto.n emploged under a contract of personal service is wrongfullg dismissed, he hqs no claim for remuneration due under the contract after repud.iation. His onlg moneu claim is Jor damages for hauing been preuented from earning his remuneration. .EIis sole ,noneg clqim is for damages qnd he must do eueryrthing he reasonablg crr,n to mitigate them." l0 l5 20 25 30 l5 l0 l5 20 25 30 The High Court awardcd the respondent general damages shillings two million and cxemplary damagcs of shillings two million. I am of the vicw that thc rcspondent is entitled to substantial damages because of thc wronglul and unfair dismissal. Clearly, this case is one o[ breach ol the contract of employment which should attract substantial damagcs. The respondent did suffer from the defamatory article that r,l,as printed in the Monitor newspaper of November of 20th 1997 and Uganda Confidential of November 28th that year. His reputation was tarnished yet the allegations of fraud were not provcd. 'l'hc board based the respondent's summary dismissal on thc complaint lrom the Privatization Unit of fraudulent dealings in which thc rcspondent was alleged to have been involved. The appellant bank was arrogant and did not co-operate with the IGG when investigations rcgerrding the respondent's dismissal were being conducted. The appcllant was unfair and arbitrary in dismissing the respondent. Unfortunately the rcspondcnt did not cross appeal to the Court of Appeal and to his court lor enhancement of damages that were awarded to him by thc ltigh Court. The appcllant did not appeal about the same mattcr. Wc takc it that both parties accepted the award of damages and thc complaint was only about terminal benefits. Grounds 1 and 2 uould succeed. I now turn to ground 3 My decision on grounds 1 and 2 disposes of ground 3 which is a complaint against thc award of intcrest on the terminal benefits. This appeal would substantially succeed. t6 5 5 I would, therefore, make the following orders; 1. I would rcstore thc order of the High Court on damages to be awardcd to the rcspondent. a) Exemplary damngcs in thc sum of shillings 2,OOO,000/= and b) General dama.gcs in sum oi shillings 2, OOO, 000/= 2. Interest on the above two at court rate from the date of judgmcnt till paymcnt in full. 3. Each party should bcar its own costs in this court and in the courts bclow. t0 l5 20 Dated at Kampala this..... day of 011 c.NHtifmilaf* JUSTICE OF THE SUPREME COURT 17 l ( THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT KAMPALA (CORAM: ODOKI, C.J, TSEKOOKO, KATUREEBE, KITUMBA AND KISAAKYE, JJ. S.C) CIVIL APPEAL NO 02 OF 2O1O BETWEEN APPELLANT AND KIYEMBA MUTALE RESPONDENT [Appeal from the decision of the Coutt of Appeal of Uganda (Mpagi-Bahigeine, Engwau and Twinomujuni J.J.A) dated 9 September 2009, in Civil Appeal No 47 of 20071 JUDGMENT OF ODOKI, CJ I have had the advantage of reading in draft the judgment prepared by my learned sister Kitumba, JSC and I agree with it and the orders she has proposed. As the other members of the Court also agree, this appeal substantially succeeds with orders proposed by the learned Justice of the Supreme Court. 6r wor day of Dated at Kampala this BJ CHIEF JUSTICE STANBIC BANK LTD :