Hans Mwesigwa and Another v Uganda Consolidated Properties Ltd (Civil Appeal No. 7 of 2002) [2003] UGSC 61 (11 March 2003)

a THE REPUBLIC OF UGANDA . IN THE SUPREME COURT OF UGANDA AT MENGO (CORAM: ODOKI, CJ, ODER' TSEKOOKO, KAROKORA, MULENGA, JJSCI CIVIL APPEAL NO. 7 OI.- 2OO2 BtrTWEEN AND UGANDA CONSOLIDATED PROPERTIES } Ltd RESPONDENT (Appeal tron the decision oJ the Court of Appeal at Kannpala bcfore lions. Kato, Okello, Mpagi- Bahigeine, JJA) dated 37"t October, 2OO7 irt CA. No. s oJ 2oo1). JUDGMENT OF KAROKORA JSC. This appeal arises out of the decision of the Court of Appeal which disnrissed appellants' appeal against the decision of the High Court which had dismissed their suit. The appellants had brought the suit in the I{igh Court claiming severance pay and general damages for breach of contract. The brief facts of the case were as follows:- Both appellants, Hans Mwesigwa and Albert Tumrvesirye, were lbrtner employees of the respondent company, the Uganda Consolidated Properties Ltd, as General Manager and Accounts Assistant respectively. 'l'he respondent Company was listed under class iv of Schedule 1 of lhe Public Enterprises Reforrn & Divestiture Statute No. 9 of 1993 (PBRD) ) HANS MWESTGWA l A. TUMWESIGYE } APPELLAN'IS due to be privatised 1007o. Before the privatisation and on the request of the respondent's Board of Directors, the PERD committee decided that the respondent be temporarily closed before the privatisation so as to safeguard the company's assets during restructuring pending privatisation. The Ciovernment decision for temporary closure was communicated to the said Board which after the closure decided to terminate the Respondent appellant's services and notified them accordingly. The appellants were paid their terminal benefits excluding the severance pay of one year's house allowance. Regulation 9 of Provision xvii of the responde nt's Staff Manual provides as follows:- " Tertninal benefits On retiretnent, resignation or tennination, the emplogee will be paid the lollouing tertninal beneftts. (a) (b) Seaerance pag oJ one gears' allotaance in addition to the aboae iJ the tertnination of emplogment uere caused abnonnallg, that is to sag, not by the emplogee or the compang itse{." The appellants had sued the respondent claiming their severance pay, alleging that their services were terminated by Government and not by the respondent company. The learned trial Judge held that the appellants' services had been terminated by the respondent company' Therefore, appellants were not entitled to severance pay' Their appeal to the Court of Appeal was dismissed hence this appeal. As amended, with leave of court, the following are the four grounds of appeal:- The leanted Jrtstices oJ Appeal erred in lano to hold that the appellants utere not entitled to sezlero,nce allowance. 2. The learned.fustices oJ Appeal erred in lana to hold that the respondent's Board oJ Directors had pou)ers to tenninate the services of the appellants. The learned &stices oJ Appeal erred in laut to have relied on the etidence oJ DWl The learted Justices of Appeal erred in lana to haue relied on the staternent Jrom the Bar of Counsel for the respondent. On the lirst ground of appeal, Mr. Tibesigwa, counsel for appellant, submitted that the Court of Appeal was in error when it upheld the decision of the trial judge to the effect that it was the respondent company which had terminated the appellants' employment and not the Government and that, therefore, the appellants were not entitled to severance allowance. He further submitted that although the suit had been brought under both the statute and contract, in determining the terminal benefits of its empioyees, the Board of Directors of the respondent company was under a duty to comply with the provisions of PERD statute. In the instant case, he submitted that the decision to close the offices of the respondent company was taken by the Government through the Executive Director of PERD, Mr. L. Muganwa, 7 o 4. but not by the respondent company. He contended that the respondent company was merely acting as an agent of the Government in the proccss of Relorm & Restructuring of Public Enterprise of which it was one. Mf,. Birungi, Counsel for respondent in support of the decision of the Court of Appeal argued both grounds I and 2 together, because fhe contencled that disposal of the first ground would dispose of the second ground. ,$tle submitted that the decision to terminate the appellants' sen,ice was made by the Board of the respondent company and therefore, according to Regulation 9(b) of the Provisions xvii of the Staff Manual, Exh P4, the appellants were not entitled to severance pay. 1'hough .1 grounds of appeal were filed, the issue, in effect, is whether the appellants were eligible to be paid severance pay when their employment rvas terruinated. The appeal thcrefore can be detennined by resolving the question of who terminated their employment. Was their employment terminated by the respondent company or by the Government? According to Regulation 9(b) of provision xvii of the Staff Manual, the appellants would qualify for severance pay if termination of their emplo-yment was abnormally caused, but would not be entitled if their erlployment was terminated by the respondent or if they left on their o\\'n In mv opinion the issue as to who terminated appellants emploYment has to be determined on the basis of two documents. The first is the letter of the Executive Director of PERD, annexture "8" dated 12l5l98 rvhich was addressed to the Managing Directors of the respondent companv' The secor-rd document is the letter from the Board of Director of the respondent company, annexture 'C" dated 30 l6/98' tenninating the .l appellants' employment vis-a-vis the objectives of PERD and in particular section 3 of PERD Statute. 'l'hc Ilxecutive Director of PERD's letter, annexture "8", stated in part as lollolvs: '?his is to inJortn gou that Gooentm;ent has decid.ed temporarilg to close doun the ofJices oJ UCPL to allou for restructuring exercise in the comtr any as requested. bg the board..........,...,' After receiving the above letter informing the respondent company the decision of the Government, the Board of Directors of the respondent compan\', wrote the letter to the appellants, annexture "C', terminating appellants employment. The letter stated in part as follows:- "In the process of restructttring the operation of UCPL, the Board, in a meeting held on June, 22nd 7998 has decided to tenninute gour sertices u.e.J 3oth .Iune 7998'. In order to determine who then terminated appellants' employment, both letters annexture'B" and annexture 'C' have to be considered in light of the objectives of the Public Enterprises Reform & Divestiture Statute 9 of I993 as spelt out in section 3 of the statute. Section 3 of the statute providcs that:- (1) The lmain objectiae oJ this stdttrte is to ghte elJect to the Gouetttrnent policg Jor public Enterprise Refonn 8t Divestihtre published in Gazette No, 48 of 7st Nouember 7997 and aLso 5 (2) the Action Plan Jor Public Enterprise ReJonn 8t Divestihtre. Without prejudice to the general ellect of Subsection 7 oJ this Section, the tollouing Objectioes shall be deemed to Jall under the Objectiae specified in that s-ubsection, (b) The promotion oJ in-stitutional arrangetnent, policies and procedures for:- o en"s-uring the elficient and saccess.;fuI ltulnagernent Jinancial, accounting and budgetary discipline oJ public enterprises. (ir) ensla,ring the seParation oJ ounership and m.qndgement Junctions; (a) the reduction oJ Governrnent equitg holding in the prublic enterprtses and therebg inter alia, relieuing Goaentment oJ the Jinancial drain on its resources and the burden oJ their administro:tion and raising reuelrue bg means oJ dioestitttre, including, rahere necessary, liquidation or dissolution of public enterprises and bg the promotion, d.evelopment and strengthening oJ the prioate sector. (iii) endbling Gooerttrzt.ent to Plag its proper role fitore ellectiaelg as outner oJ public enterPrises; and (iu) enforcing accountabilitg the rehabilitation and restructuring uthere appropriate, oJ public enterprises; and (d) the promotion oJ local enterpreneurship. In my view, examlnation of these provisions together with sections 4, 5 and section 6 of the statute, shows clearly that the role of the committee, rvhich is mainly composed of the Government officials, is to implement Government policy on reform and divestiture of public enterprises under the statute. Furthermore, section 18 of the same statute makes it abunclantly clear that the criteria of selecting public enterprises to be restructured and the individual mode of restructlrring them must be de termined by Government. Clearlv, from the above provisions, when the Executive Director of PERD u'rote the letter, Annexture "8", conveying the decision of the Government to close rlown the offices of the respondent company, the respondent company had no option but to close the company' Consequently once the compaiy rvas closed by the Government, the respondent had no jobs for the appellants' It must be noted that the respondent company was a public enterprise which was under the process of Reform and Divestiture pursuant to the Government policy as spelt out in section 3 of the statute where the respondent company had no control' Consequently in my view, the (c) Therefore the owners of the respondent company, which was the Government, through the Executive Director closed the offices of the respondent company which resulted in the appellants' termination of employment. Consequently the letter, Annexture "C", from the Board of Dire ctors of the respondent company terminating appellants' emplol,ment in the respondent company was a mere formality as the companv had already been closed by the Government. In the result, appellants' employment was abnorntally terminated by (')ovcrnment which closed the respondent company. Therefore pursuant to Regulation 9(b) of provision xvii of the Staff Manual Annexture 4, appellants were entitled to severance pay. In my view, therefore, disposal of this ground, disposes of the entire appeal. 'l'hereforc, I would allow this appeal, set aside the decisions of the lower courts. I would order that appellants be paid their severance allowances. I n,ould arvard the appellants' costs here and in the courts below. 3 subrrission by Mtli Birungi that ihe had not come across anY <:asc/section of the law which sa1's that the Government shall terminate services of employees of a private company, cannot stand in view of the lacrt thal this was not a private company but rather, a public enterprise which the statute defines as "an entemrise the uhole or Part of the proprietant interest in uhich it is held bu the state and uhich is specified in the 7.t schedule to this stahrte" Dated at Mengo this....l. I a.v ..1".1..ci-,L=......., 2003. A.N. Karokora, Justice of the Suprerne Court. \ \ L ..-.^r--.r.--. V o-r.-- THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT IMENGO (CORAIVI, ODOKI CJ. ODER, TSEKOOKO, KAROKORA, N/ULENGA, JJSC) CIVIL APPEAL NO, 7 OF 2OO2 BETWtrEN HANS MWESIGWA A, TUIVWESIGYE APPELLANTS AND UGANDA CONSOLIDATED PROPERTIES RESPONDENT 1 2 (Appeal from the decision of the Court of Appeal (Kato, Okello, Mpagi-Bahigaine, JJA) at Kampala dated 31't October 2001 in Civil Appeal. No. 5 of 2001). JUDGEMENT OF MULENGA JSC I had benefit of reading in draft the judgement prepared by my learned brother Karokora JSC. I agree with him that the appeal ought to be allowed with costs to the appellants. I would only wish to add one observation for emphasis. It appears to me that the courts below misconstrued the stipulation that the employee would be paid severance pay only "if the termination of employment were caused abnormatty, that is to say not by the employee or the company lfse/f. " Employment is a contract between the employer and the employee. lt is normally terminated by either party, and strictly can not be terminated by a stranger to the contract. Clearly what is envisaged in the said stipulation ts not who terminates the employment but rather "what causes termination of the employment'. There can be no doubt in the instant case that the termination of the appellant's employment was caused by the Government decision to close down the respondent's offices. The termination was therefore "caused" abnormally, even if it was "effected' normally through the letters of termination. The appellants were therefore entitled to the severance pay. t L rtt- DATED at Mengo .. the day of .2003 J N ltrlulenga JUSTICE OF SUPREME COURT ) REPIIBLIC OF UGAT{DA SUPRTME COIIRT OF UGAI{DA AT UENGro (CORPM: ODOKI, CJ, ODER, TSEKOOKO, KAROKORA, AND MULENGA, JJ.SC.) CTWL APPEAL NO.7 OF 2OO7 1. HANSM*ESIG*A, ::TTl ------- APPELLANT. 2. A. TUMWESIGYE ) AND UGANDA CONSOLIDATED PROPERTIES LTD-----.------.. RESPONDENT lAppeat from the decision of the Court of Appeal, at Kampala (Kato, Berko and Mpagi-Bahigeine, JJA) d.ated 5h January 20Ol in Ciuil Appeal 1[o.5 of 2OO1)- JUDG MENT OF TSEKOOKA JSC Deliuered at Mengo the t) ' t(.ur_ L.- dag - - 1 --:=t-:--:- - ->- - - - - - --of 2 O O3 - /r, I have had the benefit of reading in draft the judgment ot Karokora, JSC, and I agree. with his conclusions that the ri LL.' r --r...'/ appeal should be dieilM. I agree with the orders proposed bv him. JV. ekooko Juslf cb *tlte Supreme Court. rr. THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT MENGO (CORAM: ODOKI CJ, ODER, TSEKOOKO, KAROKORA AND MULENGA, JJSC) CIVIL APPEAL NO.7 OF 2OO2 BETWEEN HANS MWESIGWA} A TWESIGYRE } ::::::::: ::: ::::: APPELLANTS AND UGANDA CONSOLIDATED PROPERTIES :::::::::::::::::::::::::: RESPONDENT (Appeal from the decision of the Court of Appeal (Kato, Okelio and Mpagi-Bahigeine, JJA) dated 31't October 2001 in Civil APPeal No.S of 2001) JUDGMENT OF ODOKI, CJ I have had the advantage of reading in draft the ludgment of Karokora, JSC and lagree with him and the orders he has proposed As the other members of the court also agree with the judgment and orders proposed therein, this appeal is allowed with costs here and in the courts below Dated at Mengo this t2- -t.. o^yot ..(4d. 2003 A e O-oooki CHIEF JUSTICE t (CORAM: THE REPUBLIC OF UGANDA IN THE SUPRDME COURT OF UGANDA AT MENGO ODOKI,CJ, ODER, ISDKOOKO, KAROKORA AND MULENGA, JJSC.) CIVIL APPEAL NO. 7 OF 2OO2 BETWEEN 1. }IANS MWESIGWA 2. A. TUIYIWESIGYE: APPELLANTS AND UGA NDA CO N SOLI DA?E D PROPERTI E S : R.OSPONDENT Aplteul .from the riecisiort of the Court of Appettl at Kampala (kno, Oketlo and Mpagi-Bohigeine, JJ.A.) dated 31-1O-2O01, in Ciuil Appeal No. 5 of 2OO1). JUDGMENT OF ODER - J.S.C. I h:rve had the advantage of reading in draft the judgment prepared by nr1' learned brother Karokora, J.S.C' I agree with him that the appeal should succeed. I also agree with the orders proposed by him. Dated at Mengo this. . . . dag of. 2OO2. A. H. O. ODDR JUSTICE OF THE SUPREME COUT<T