IN THE NATIONAL INDUSTRIAL COURT OF
NIGERIA
IN THE LAGOS JUDICIAL DIVISION
HOLDEN AT LAGOS
BEFORE HIS LORDSHIP HON. JUSTICE (PROF) ELIZABETH A OJI
DATE:
WEDNESDAY 5TH MARCH 2024 SUIT NO: NICN/LA/62/2020
BETWEEN
ESSIEN
AQUAISUA
CLAIMANT
AND
1.
DIRECT ON DATA LTD
2.
MR. FOLAHANMI FAGBULE DEFENDANTS
3.HOOP
TELECOMS LTD
Representation:
K U Okoro with E. Aquaisua for the Claimant
Walemi Esan with Fikayo Ogunride(Mrs) and Mohammed Adam
for the 1st and 2nd Defendants
Introduction and
Claims:
1. On the 19th
day of February 2020, the Claimant filed
this suit via the General Form of Complaint, together with the Statement of
Facts, list of Claimant’s witnesses, the Claimant’s witness on oath, verifying
affidavit, list of documents; all dated the same 19th day of
February 2020 and copies of the documents
to be relied on by the Claimant at the trial of this suit. The Claimant claims
against the Defendants as follows:
1.
A declaration that the termination of the
Claimant’s employment by conduct by the 2nd Defendant, is wrongful
and in breach of the contract of employment with the 1st Defendant.
2.
payment of the sum of N3,195,105.93 (Three Million, One Hundred and Ninety-Five Thousand,
One Hundred and Five Naira, Ninety-Three Kobo) being terminal benefit due to
the Claimant owing to the wrongful termination of the Claimant’s employment.
3.
interest on the above sum at the rate of 10% per
annum from 9th December 2019, being the time, the payments became
due, until judgment is entered in this suit.
4.
N5,000,000
(Five Million Naira only) general damages for breach of contract and of
unlawful termination of employment; and
5.
10% interest per annum on the entire judgment
sum from the date of judgment until same is completely liquidated
2.
In response to the claims, the 1st and 2nd Defendants filed their Statement of Defence
dated 22nd day of March 2022 together with a list of Defendant’s
witness and Defendant’s witness statement on oath deposed to by Mr. Folahanmi Fagbule, list of documents and copies of documents
to be relied on at the trial. The 3rd
Defendant filed a Notice of Preliminary Objection (“NPO”) dated 23rd
day of July 2020 praying the Court to strike out the suit against the 3rd
Defendant and on 15th October 2020, this Honourable Court delivered
its Ruling on the 3rd Defendant’s Objection holding that it has
jurisdiction to entertain the matter and dismissed the Objection. Thereafter,
the 3rd Defendant appealed against the ruling of the Court. The Court thereafter, on the consensus of the
parties, stayed the proceedings as against the 3rd Defendant on the
ground that the 3rd Defendant’s appeal had been entered. Thus, the
proceedings continued against the 1st and 2nd Defendants. Trial commenced in the suit on 30th day
of June, 2021. The Claimant gave evidence for himself
as CW by adopting his witness statement on oath deposed to on the 19th
day of February 2020. During the examination in chief, the Claimant tendered in
evidence the following documents:
1.
Exhibit C1 Letter of employment dated 13th day of
January,2015
2.
Exhibit C2 Direct On PC Staff Handbook
3.
Exhibit C3 Copy of Certified True Copy (“CTC”) of “Particulars of
Secretary”,
Form
CAC 2.1 of Direct on Data Ltd (“DDL”)
4.
Exhibit C4 DDL October 2019 Payroll
5.
Exhibit C5 E-mails between Essien/Jim/Fola, titled “staff terminal
benefit” with
the
attachment “DDL Terminal Pay” on 13th day of November 2019, Fola’s
response on 13th day of November 2019, Essien/Fola on 15th
day of November 2019, and Fola’s response on 15th day of November2019;
Mary-Essien/Tayo with CC to
Fola/Manpreet on “update on appointment”
6.
Exhibit C6 Spreadsheet of DDL TERMINAL PAY
7.
Exhibit C7 Letter from Essien Aquaisua & Co dated 14th
day of January 2020
8.
Exhibit C8 E-mails dated 17th
day of January 2020 between Essien/Fola/Jim
and
Fola/Essien on “Demand Notice” with the attachment “Demand Notice”
9.
Exhibit C9 Copy of the CTC of “Particulars of Shareholders”, Form
CAC 2A of
DDL
10. Exhibit C10 Copy of CTC of “Particulars of Directors”, Form CAC 7A
of DDL
11. Exhibit C11 Letter from LIRS dated 26.08.2019
12. Exhibit
C12 Letter from Hoop titled “Request for Information:
Requirement for a
seamless transaction post assets acquisition” dated
12.11.2019
13. Exhibit C13 E-mails dated 06th
January 2020 between Essien/Jim/Essien on
“Terminal Benefits”
14. Exhibit
C14 Letter from Essien Aquaisua & Co dated 20th day of January 2020
15. Exhibit C15 Emails 20thday of January 2020 – 23rd
day of January 2020
(Essien/Jim/Essien) titled “Retainership Proposal”
3. On the 13th
day of January 2022, the Court foreclosed the right of the 1st and 2nd
Defendants to cross-examine the Claimant for failure to appear in Court on
several occasions despite service of hearing notices. However, the 1st and 2nd
Defendants brought an application to regularise their defence which was granted
on 19th July 2022. On 17th November 2022, The Defendant’s witness Mr. Folahanmi
Fagbule gave evidence as
DW by adopting his witness statement on oath deposed to on the 22nd day of March 2022 and was cross-examined accordingly. The Defendants
tendered no exhibit. At the end of trial, the Court ordered the
parties to file their respective final addresses. The Final Written Address of
the 1st and 2nd Defendants was adopted on 22nd
day of February 2024. The Claimant’s final
written address and Reply were deemed adopted by the Court on the same day, and
the matter adjourned for judgment.
However, the Claimant wrote that he did not receive the Court’s notice
sent to the Claimant’s Counsel’s phone number on the Court’s record. Counsel said he wanted to adumbrate and that the
deemed adoption did not give him the opportunity to adumbrate. On the 22nd of February 2024, the
Claimant, with notice given to the Defendants, returned to Court to
adumbrate. Claimant’s motion on notice
dated 19th February 2024 and fled on same date, is hereby struck
out, having been overtaken.
THE
CASE OF THE CLAIMANT
4.
The Claimant was employed by the 1st Defendant vide a letter
of appointment dated 13th day of January 2015, as the Head of Legal
and Human Resources. In this role, the Claimant handled all legal, regulatory,
staff remuneration, discipline, welfare and benefits inter alia with the
approval of the 2nd Defendant who was a Director of the 1st
Defendant owning 99.9% shares thereof. Sometime
about 7th November 2019, the 2nd Defendant announced to
the Claimant that they have transferred the ownership of the 1st
Defendant company to the 3rd Defendant and urged the Claimant to
cooperate with the 3rd Defendant for a smooth takeover of the 1st
Defendant by the 3rd Defendant and that the new owners will meet
with the Claimant and other members of the management team to give further
details. The 3rd Defendant, on 8th November 2019 met with
the Claimant and staff of the 1st Defendant and discussed their plans
and requested that the Claimant should compile final entitlements of the staff
and send to 3rd Defendant’s Managing Director, Mr. Jim Chinasa and
the 2nd Defendant for settlement before the new contract is entered
into with the 3rd Defendant. The
Claimant compiled the schedule of staff entitlements and sent it as directed
and none of the Defendants disputed any aspect of the staff entitlements at all
save the 2nd Defendant who addressed the staff on 9th
December 2019 that there will be no payment of terminal benefits as he had
offered them jobs. The 2nd
Defendant stated that the Claimant was no longer relevant under the new
arrangement, though there was no formal communication to the Claimant. Upon the
announcement aforesaid, full-fledged hostility was unleashed on the Claimant
where both Claimant’s office, mail id, and all the tools to work with were
taken over by the 3rd Defendant and the Claimant had to leave the
premises.
5.
Based on the final entitlements already computed, the Claimant sent
demand letters to the Defendants asking for his terminal benefits but got no
positive response from them, hence this suit.
The Claimant states his entitlement as
follows:
1.
Outstanding leave allowances (2018/2019, 45 days
encashment -N988,856.72; 2019/2020, 30 days encashment – N659,237.81, Leave
allowance- N632,868.30*
2.
One month salary in lieu of notice N703,187.00*
3.
Salary(1/12/2019 - 9/12/2019) N210,956.10
Total N3,195,105.93
It is the case of the Claimant that the
Defendants decided to announce the sale of the 1st Defendant in
order to fraudulently abandon all its liabilities to government authorities to wit: LIRS, FIRS, NCC; fraudulently
abandon its obligations to staff (the Claimant inclusive); and fraudulently
abandon its obligations to vendors and other secured creditors; notwithstanding
being still controlled by the 3rd Defendant.
THE CASE
OF THE 1ST AND 2ND DEFENDANTS
6. It is the case of the 1st and 2nd
Defendants that sometime in January 2015 the 1st Defendant acquired
the business of Direct On Pc Ltd (“DOPC”), and upon the acquisition, the
1st Defendant employed all the employees of DOPC Ltd via fresh
letters of employment which embodied the entirety of the terms governing each
employee’s employment with the 1st Defendant. The Claimant in this
suit was among the employees employed by the 1st Defendant as head,
Legal/Human Resources and subsequently in 2017, was also appointed as Company
Secretary. By an Asset Purchase Agreement dated 31st day of October
2019 (“APA”), the 1st Defendant sold to the 3rd
Defendant its assets only. The implication being that the 3rd
Defendant did not acquire the liabilities of the 1st Defendant. Upon
the acquisition of assets by the 3rd Defendant, the 2nd
Defendant informed the Claimant and urged the Claimant to cooperate with the 3rd
Defendant for a seamless transfer of the 1st Defendant’s assets to
the 3rd Defendant. Subsequently,
the 3rd Defendant formerly informed the 1st Defendant’s
staff and urged them to work with the 3rd Defendant for a seamless
takeover of the assets of the 1st Defendant. The Claimant without
any instruction from Mr. Jim Chinasa, the Chief Executive Officer of the 3rd
Defendant, drew up a purported schedule of terminal benefits for the employees
of the 1st Defendant. The schedule of terminal pay was addressed to
Mr. Jim Chinasa and the 2nd Defendant immediately responded that
there will be no termination of employment of the 1st Defendant’s
employees, as such, there is no basis for the computation or payment of
terminal benefit for the employees. Notwithstanding
this response, the Claimant by further mail of 15.11.2019, alleged that the 1st
Defendant’s employees had staged a protest to demand answers to their concerns.
The 2nd Defendant in his email on the same date, reiterated the fact
that no payments would be made to the employees as terminal benefits. The 2nd
Defendant further stated that the asset transaction was being undertaken to
save the jobs of the 1st Defendant’s employees. Upon the acquisition
of the assets of the 1st Defendant, the 3rd Defendant
employed some of the employees of the 1st Defendant and the Claimant
was not employed by the 3rd Defendant; thus, the Claimant remained
an employee of the 1st Defendant. It is also the case of the
Defendants that the 1st Defendant has nothing called encashment
policy and has always paid to Claimant all his entitlement as at when due.
7. It is further the case of the Defendants that sometime
in December 2019, the Claimant abandoned his employment with the 1st
Defendant without giving prior notice of his resignation and unilaterally
decided to deem his employment terminated even after the 2nd
Defendant by email dated 17th of January 2020 expressly stated that
the Claimant’s employment with the 1st Defendant was never terminated
and nevertheless the Claimant instituted this suit. The Defendants state that
the 1st Defendant
had a valid reason to sell the 1st Defendant to the 3rd
Defendant and it was not to evade taxes as claimed by the Claimant; and that
the 2nd Defendant is not the alter ego of the 3rd
Defendant as claimed by the Claimant at all.
THE
CLAIMANT REPLY TO THE DEFENDANT STATEMENT OF DEFENCE
8.
The Claimant replied that the Letter of Appointment was basically an invitation
and acceptance to commence work on a disclosed salary with the 1st
Defendant and contained just the basic terms and that the 1st
Defendant adopted all operational framework of Direct on Pc Ltd and Claimant
was given the staff handbook along with the Letter of Appointment. On the issue of leave encashment, the
Claimant replied that the leave encashment came about as a result of inadequate
manpower, which the company found expensive to address. In such cases, the
company policy, rule and practice was to “encash” the leave of the concerned
staff, which simply meant paying money in lieu of the leave. The Claimant as a management staff was
entitled to 30 days annual leave and was not allowed to go on leave in view of
the manpower shortage aforesaid. In the year 2017 the Claimant took only 15days
leaving a balance of 15 days. At the time of the purported sale of 1st
Defendant in November 2019, the Claimant was owed leave arrears of 45days,
which was no longer possible to take and needed to be encashed. The Claimant
was also entitled to 2019 leave which also had to be encashed as same can no
longer be taken, and also entitled to the leave allowance all calculated and
shown in the schedule.
9.
On the issue that the Claimant abandoned his employment, the Claimant
replied that he never abandoned his employment; however the 1st
Defendant’s website and mail servers was shut down, his office taken over, and
all facilities therein and he was denied all access (including access to the
premises). The 1st and 2nd
Defendants went completely underground which conduct amounted to termination of
the Claimant’s employment by conduct.
SUBMISSIONS ON BEHALF OF THE CLAIMANT
10. The Claimant raised a sole issue for
determination of this suit as follows:
·
Whether from the totality of the facts and evidence
before the Honorable Court, the Claimant has proved his case to be entitled to
the reliefs sought before this Honourable Court?
11.
The Claimant argued that generally, a Claimant who seeks a declaration
that the termination of his appointment was wrongful must prove the following
material facts:-
(a) that he is an employee of the
defendant;
(b) the terms and conditions of his
employment; and
(c)
the way and manner and by whom he can be removed.”
The Claimant relied on the case of Ujam v. Institute of Management &
Technology & Ors(2006) LPELR-7688(CA), (Pp. 9 paras. D). The Claimant submits that Exhibit C1 (the
appointment letter) creates a nexus between him and the 1st
Defendant and other documents such as the staff handbook, management directives
which came via e-mails etc. The Claimant
submits that by virtue of his confirmation and salary raise, his appointment
can only be lawfully terminated upon the giving of one month notice or payment
of one month’s salary in lieu thereof along with other entitlements. However, the Defendants failed and or refused
to do so. The Claimant argued that upon
his constructive discharge without due process, he established his entitlement
which was calculated and sent to the 2nd and 3rd Defendants
in the course of his duty and same was admitted as exhibit C5 and Exhibit C6
and that the evidence was not contradicted by the Defendant. The Claimant submits that it is trite law
that, “evidence that is not challenged or discredited should be relied on if
such evidence is adduced to establish a relevant fact” relying on CBN v. Okojie (2015)14 NWLR (PT.
1479). The Claimant also argued that the
1st and 2nd Defendants pleaded “Asset Purchase Agreement”
and other documents in their pleadings but did not tender it in Court. It is the Claimant’s view that the documents
are relevant and if such documents are tendered would have given the Court
insight into the true nature of the relationship between the Defendants and the
Claimant. The Claimant relied on Section
167 (d) of the Evidence Act which states that – “evidence which could be and is
not produced would, if produced, be unfavorable to the person who withholds
it”. The Claimant urged the Court to
invoke the provisions of that section against the Defendants for the
suppression of material evidence by relying on the case of The Incorporated Trustees Of The Brotherhood Of Cross And Star v. Mr. E.T. Nkereuwem & Ors(2018)LPELR-44087(CA)
SUBMISSIONS
ON BEHALF OF THE DEFENDANTS
12. The
Defendants raised three issues for determination as follows:
(i)
Whether given the facts and
circumstances of this case, the 1st and 2nd Defendants
could be said to have terminated the Claimant’s employment.
(ii)
Whether in the absence of an employee – employer
relationship between the Claimant and the 2nd Defendant, the
Claimant’s claim can be sustained by this Honourable Court as against the 2nd
Defendant.
(iii)
Whether the Claimant is entitled to the reliefs sought
in this suit against the 1st and 2nd Defendants.
13. Issue one -
whether given the facts and circumstances of this case, the 1st and
2nd Defendants could be said to have terminated the Claimant’s
employment? The Defendant argued that the Claimant has failed wholly to
establish that 1st and 2nd Defendants terminated his employment
and that since the Claimant has failed to support his entire allegation with
evidence, it shows that the Claimant actually abandoned his employment without
giving any valid reason or notice of resignation as required by the letter of
appointment. The Defendants submit that the 1st and 2nd
Defendant’s position is strengthened by the email trail of 17.01.2020 (Exhibit
C8), wherein the 2nd Defendant expressly confirmed that the
Claimant’s employment with the 1st Defendant was never terminated. The Defendants relied on the case of Ziideeh v. R.S.C.S.C. [2007] 3
NWLR (Pt. 1022) 554 at 570 paras A-D, wherein the Supreme Court held among
other things that an employee who complains of wrongful termination of
employment by his employer has the onus to prove the wrongful termination of
the said employment by: (a) placing before the Court the terms and conditions
of the contract of employment; and (b) proving in what manner the said terms
were breached by the employer. The
Defendants urged the Court to hold that the Claimant has failed to prove
wrongful termination of his employment.
14.
Issue two - whether in the
absence of an employee – employer relationship between the Claimant and the 2nd
Defendant, the Claimant’s claim can be sustained by this Honourable Court as
against the 2nd Defendant.
The Defendants argued that the Claimant has no contract of service with the 2nd
Defendant; therefore, the 2nd Defendant cannot be liable to pay the
Claimant terminal benefits as the 2nd Defendant is not privy to the contract
between the Claimant and the 1st Defendant. The Defendants submit that
the 1st Defendant is a duly incorporated company and is therefore a persona ficta - a juristic person –
distinct from the 2nd
Defendant. The Defendants relied on the
case of Salomon v Salomon [1897] AC. The 2nd Defendant also
argued that the Claimant has not proved his case against the 2nd
Defendant in accordance with the rules laid down in the case New
Nigerian Newspapers Ltd. v Agbomabini [2013] LPELR-20741(CA) to
warrant the 2nd Defendant to be liable to the Claimant.
15.
Issue three - whether
the Claimant is entitled to the reliefs sought in this suit against the 1st
and 2nd Defendants? The 1st
and 2nd Defendants argued that the
Claimant has not placed any credible evidence before this Honourable Court to
show entitlement to the declaratory reliefs sought and that the Claimant who
seeks a declaratory relief, has the onus to succeed on the strength of his own
case and not on the weakness of the Defendant such that even an admission or
non-appearance by the Defendant is not sufficient to discharge the burden of
proof. The Defendant relied on the case of Nwagu v Fadipe [2012] 12
NWLR (Pt.1318). The 1st and 2nd
Defendants argued that the Claimant’s reliefs (b), (c), (d) and (d) (sic) as
contained in the Claimant Statement of Fact are ancillary reliefs and the
Claimant having failed to demonstrate his entitlement for relief (a), being the
principal relief, the ancillary reliefs must fail. The Defendants relied on the
case of Yil v Ngumar [1998] 8 NWLR (Pt.560) 125 at 137, paras
F-G. The 1st and 2nd
Defendants further argued that the Claimant is not entitled to terminal benefit
in view of Exhibit C8, the letter informing the Claimant of his subsisting
employment with the 1st Defendant, therefore, in the absence of any
termination; the Claimant cannot be entitled to any terminal benefit from the 1st
and/or the 2nd Defendants whatsoever.
16.
The 1st and 2nd Defendant further argued that the
1st Defendant does not have encashment policy and that the Claimant
has failed to contradict the 1st and 2nd Defendants’
witness. The Defendants submits that the
Court must accept the evidence of the 1st and 2nd
Defendants and act on it by relying on the case of Adelakun v. Oruku
[2006] 11 NWLR (Pt. 992) 625 at 644, para. A.
The Defendants argued that the Claimant is not entitled to general
damages as the Claimant did not suffer any damages since it was the Claimant
that abandoned his job; thus there is no basis for awarding general damages. The 1st and 2nd
Defendants further argued that the Claimant is not entitled to pre-judgment
interest because it must be pleaded and proved and the mere stating of a claim
for pre-judgment interest without proof of same is not valid. The Defendant
relied on the case of U.B.A. Plc v. Oranuba [2014] 2 NWLR (Pt. 1390) 1 at 40 paras G-H. Further, the 1st and 2nd
Defendants argued that the Claimant is not entitled to post judgment interest
because it is at the discretion of the Court and the Claimant must have proved
his case before he can be entitled to post judgment interest.
THE CLAIMANT’S REPLY
ON POINT OF LAW
17.
On whether the Claimant was constructively discharged, the Claimant
replied that it has been settled at the trial and during cross-examination of
the 2nd Defendant, which the Defendants never challenged or
controverted in any way. On the issue
that the 2nd Defendant is not privy to the contract between the
Claimant and 1st Defendant, the Claimant replied that it was not
pleaded and that the submission of Counsel cannot be substituted for evidence. The Claimant further submits that as a
general rule, the Court will lift the veil of incorporation in the interest of
justice where there is evidence of fraud or other improper conduct - Gilford Motor Co v. Horne (1933) CH
935;(1933)ALL ELR 109 CA. Claimant
argues that the asset sale between the 1st and 3rd
Defendant was a well-conceived fraud by the 2nd Defendant which the
2nd Defendant did it with intent to defraud creditors and the
ultimate beneficiary is the 2nd Defendant who pocketed the proceeds
of the asset sale. The Claimant urged
the Court to lift the veil and hold the 2nd Defendant jointly liable
in this case. On the issue of interest,
the Claimant replied that the interest is properly pleaded and endorsed on his Writ
and Statement of Facts and requisite Court fees paid. On the issue of award of cost, the Claimant
replied that in the case of UBA Plc v. Vertex
Agro Ltd (2019) LPELR-48742(CA) Per AGIM, J.C.A(Pp.53-57,paras. D-A) the Court
gave the guiding principle for awarding cost.
COURT’S
DECISION
18.
I have carefully considered the processes filed in this case, the
evidence led, the written submissions and authorities cited by Counsel in their
final written addresses. I also
evaluated all the exhibits tendered. From
the state of the pleadings and the evidence led, the facts are settled that the
Claimant was an employee of the 1st Defendant via a letter of
employment dated 13th January 2015(exhibit C1). The dispute here revolves on when and how the
Claimant’s employment came to an end.
The Claimant’s contention is that his employment was terminated by
CONDUCT of the 1st Defendant, when the 1st Defendant was
sold to the 3rd Defendant and he could no longer have access to his
office and the 1st Defendant’s website. The Defendants on the other hand, contend
that the Claimant abandoned his employment when he stopped going to work in the
1st Defendant. The Defendants
contend that having not been absorbed in the 3rd Defendant, the
Claimant continued to be its staff, and no conduct of hers terminated the
Claimant. I hereby set the following
three issues down for determination:
i.
Whether from the facts of the case, the Claimant
has proved that his employment was terminated by the conduct of the 1st
Defendant.
ii.
Whether the Claimant is entitled to the reliefs
he seeks.
iii.
Whether the veil of incorporation should be
lifted to hold the 2nd Defendant jointly liable in the contract
between the Claimant and the 1st Defendant.
Issue One
19.
Issue one is whether from the facts of the case, the Claimant has proved
that his employment was terminated by the conduct of the 1st
Defendant. From the facts made available
to this Court, the Claimant, as at 7th November, 2019, was the Head
of Legal and Human Resources of the 1st Defendant. The 2nd Defendant on 7th
November 2019 announced to the Claimant that he has transferred the ownership
of the 1st Defendant to the 3rd Defendant. The new owners met with the Claimant and
other staff of the 1st Defendant to determine the fate of the
staff. Exhibit C5, which content is not
contested, shows that there was a town hall meeting between the 3rd
Defendant and the staff of the 1st Defendant. The facts also disclose that not all former
staffs of the 1st Defendant were absorbed by the 3rd
Defendant. What then was the fate of the
staffs that were not retained by the 3rd Defendant, after it bought
over the assets of the 1st Defendant? The Claimant was not absorbed by the 3rd
Defendant. The emails of 20th
and 22nd January between the Claimant and the MD/CEO of the 3rd
Defendant establishes this fact(see exhibit C15).
20.
The Defendant’s argument as shown in the response of the 2nd
Defendant to the Claimant is that the Claimant remained a staff of the 3rd
Defendant. The question that readily
comes to mind is; as what? The company
(1st Defendant) had undoubtedly been sold to the 3rd
Defendant and a job was not offered to the Claimant. The Claimant gave evidence that:
16.
Apparently, with the fear of disruption almost then non-existent, 2nd
Defendant addressed the staff on 9th December 2019 that there would
be no payment of terminal benefits as he had now offered them jobs and that I
was no longer relevant under the new arrangement without formally communicating
same to me either by mail or letter.
Thus, I deemed my appointment with the 1st Defendant
terminated on 9th December 2019 by 2nd Defendant’s
conduct.
17.
Thereafter, I made demand for my terminal benefits as per my contract of
employment which is made up of….
22(k)
Immediately after the transfer of 1st Defendant’s assets to
the 3rd Defendant was perfected and the 3rd Defendant
took over the office premises of the 1st Defendant, the 2nd
Defendant ordered immediate shutdown of 1st Defendant’s website - www@directondata.com. My access to my
e-mails was denied, my password was changed without my consent.
22(l)
Further, the 2nd Defendant announced to the staff that the 1st
Defendant had been shutdown and the letter of termination given to some staff
that were not absorbed by the 3rd Defendant…
21.
It is in the circumstance of the sale of the 1st Defendant to
the 3rd Defendant, by the 2nd Defendant, that the
Claimant alleged that he found his job had been dispensed with. He was neither absorbed by the 3rd
Defendant; nor was he issued a letter of termination, by the 1st and
2nd Defendants. He therefore
read his termination, from the conduct of the 1st Defendant. In exhibits C8, the Claimant wrote to the 1st
and 2nd Defendants demanding for his terminal benefits, upon which
the 2nd Defendant responded that the Claimant was never terminated,
and thus, still remained a staff of the 1st Defendant.
22.
In alleging termination by conduct, the Claimant was relying on what has
now come to be known as constructive discharge(constructive termination or
constructive dismissal). The Claimant
raised that issue in his Reply on Points of Law; whether the termination of his
employment is not a classic case of constructive dismissal?
23.
Constructive dismissal or termination as indicated by case law is a
situation where an employer creates such working conditions (or so changes the
terms of employment) that the affected employee has little or no choice but to
resign. In such cases, the employee
retains the right to seek legal compensation as having been dismissed or
terminated constructively. In the case
of Western Excavating v. Sharp (1978)
1 All ER 713,
Lord Denning listed what an employee must prove in a claim for constructive
dismissal as follows:
1.
A
repudiatory breach on the part of the employer,
2.
An
election by the employee to accept the breach and treat the contract as at an
end,
3.
The
employee must resign in response to the breach,
4.
The
employee must not delay too long in accepting the breach, as it is always open
to an innocent party to waive the breach and treat the contract as
continuing(subject to any damages claim that they may have)
24.
This Court in the case of Miss
Ebere Ukoji v. Standard Alliance Life Assurnace Co. Ltd. Suit [2014] 47 NLLR (Pt. 154) 531held
that:
Globally, and in labour/employment law,
constructive dismissal, also referred to as constructive discharge, occurs when
an employee resigns because his/her employer’s behaviour has become intolerable
or heinous or made life difficult that the employee has no choice but to
resign. Given that the resignation was not truly voluntary, it is in effect a
termination. In an alternative sense, constructive dismissal or constructive discharge
is a situation where an employer creates such working conditions (or so changes
the terms of employment) that the affected employee has little or no choice but
to resign. Thus, where an employer makes life extremely difficult for an
employee, to attempt to have the employee resign, rather than outright firing
the employee, the employer is trying to create a constructive discharge. The
exact legal consequences differ from country to country but generally a
constructive dismissal leads to the employee’s obligations ending and the
employee acquiring the right to seek legal compensation against the employer.
The employee may resign over a single serious incident or over a pattern of
incidents, Generally, the employee must have resigned soon after the incident.
25. In the following cases, the Courts held the
following circumstances as justifying a holding for constructive dismissal:
a.
unilaterally changing the employee’s duties, as
in Coleman (DA) v. S&W Baldwin [1977]
I.RL.R 342.
b.
unilateral reduction of the employee’s payment,
as in Industrial Rubber Products v.
Gillon [1977] I.R.L.R 389.
c.
insisting upon the employee to work beyond the
contractually obliged hours; see Derby
City Council v Marshall [1979] I.C.R. 731.
d.
requiring the employee to work where they are
not contractually required to work; O’Brien
v Associated Fire Alarms [1968] 1 WL.R. 1916 and Courtaulds Northern Spinning v. Sibson [1988] I.C.R. 451.
e.
Breach of the implied term of trust and
confidence - Malik v Bank of Credit and
Commerce International SA (In Liquidation) [1997] 3 All E.R. 1.
f.
Where the employer asked the employee to resign
- Mrs Vivien Folayemi Asana v. First Bank of Nigeria Ltd unreported Suit
No. NICN/LA/184/2016 the judgment of which was delivered on 9 October 2018, Mr David A. Fadipe v. Cedarcrest Hospitals
Limited unreported Suit No. NICN/ABJ/147/2018.
g.
Where the Claimants were invited to a meeting
and in that meeting were asked to resign their appointments - Mr Charles
Ughele v. Access Bank Plc unreported Suit No. NICN/LA/287/2014.
h.
To attempt to have the employee resign, rather
than outright firing the employee means that the employer is trying to create a
constructive discharge - Miss Ebere
Ukoji v. Standard Alliance Life Assurance Co. Ltd [2014] 47 NLLR (Pt. 154)
531 NIC and Mr. Patrick Obiora Modilim v. United Bank for Africa Plc
unreported Suit No. NICN/LA/353/2012 the judgment of which was given on 19th
June 2014.
i.
Employer’s
removal of an employee from the office of Company Secretary, contrary to the
provisions of section 296(2) of the CAMA, and the redeployment of the staff to
a department she was not trained for nor had any knowledge about, with a staff
performance target of N594, 000,
000. - Mrs. Ikeade Aribaba v. Lagos Building Investment Company Plc & Anor
Suit No. NICN/LA/478/2020 judgment delivered on Tuesday 4th July
2023.
j.
Where the
Defendant created a hostile environment for the employee by removing his
reporting line, forcing him to vacate his office with no alternative and
rendering him effectively redundant - Mr Folarin Bakare v. Lagos Building
Investment Company Plc Suit
No. NICN/LA/626/2016 judgment delivered on 19th November 2018. See also Lucia Balonwu v. Voluntary
Service Overseas (VSO) Internationa Unreported Suit No. NICN/ABJ/280/2018,
the judgment of which was delivered on 22 July 2020.
k.
Where an employer invited the employee to his
office and compelled him to tender his resignation, immediately accepted the
resignation and paid the employee three months’ salary in lieu of notice. The Court held the resignation was in effect,
a termination - Mr. Clement Adetokunbo
Adesoro v. FSDH Merchant Bank Limited Suit No. NICN/LA/187/2020 judgment
delivered on Tuesday 16th May 2023.
See also Lawrence Okpako v.
Globacom Limited & Anor Suit
No.NICN/LA/761/2016 Judgment delivered on Monday 28th October 2019.
l.
The
Defendant committed a repudiatory breach by adopting a wrong disciplinary
procedure against the Claimant, contrary to its own policies, leading to a
wrongful act of suspension and reduction in the rank of the Claimant - Mrs. Eluemuno
Olumagin v.Total E & P Nigeria Limited Suit No: NICN/LA/580/2018 judgment delivered
on Tuesday 16th May 2023
26. In
this case, the Claimant has alleged that the 1st Defendant
terminated his employment by conduct when it sold off its assets to the 3rd
Defendant; including his office and access to it. In effect, the sale of the 1st
Defendant meant that the Claimant’s employment ceased. In this case, the 1st Defendant
has so changed the circumstances of the employment, that there seemed to be no
employment left for the Claimant. Though
the 2nd Defendant; after receiving Claimant’s letter demanding for his
terminal benefits informed the Claimant that he was still regarded as a staff
of the 1st Defendant; I do
not see the practicability of that assertion, being that the 1st
Defendant had practically become the 3rd Defendant, without the 3rd
Defendant absorbing the Claimant, even though it absorbed others. I accept the Claimant’s submission that his
employment is deemed terminated by the act of the 1st
Defendant. This is constructive
termination, requiring the Defendant to still fulfil its obligations to the
Claimant, as it would have, had the Claimant been issued a letter of
termination. The
Claimant did not stay beyond the period of three months stated in the case of Miss Ebere Ukoji v. Standard Alliance Life
Assurnace Co. Ltd. Suit [2014]
47 NLLR (Pt. 154) 531 before requesting that the 1st and 2nd
Defendants fulfil their responsibilities to him, according to contract. The Claimant wrote to the Defendants on 14th
January 2020, about two months after the sale of the 1st Defendant,
and non-absorption of the Claimant by the 3rd Defendant. The Defendant did not prove how the Claimant
abandoned his employment when there was no employment to go to.
Issue two
27.
Having resolved that the Claimant was constructively terminated, the
next issue is “whether the Claimant is entitled to the reliefs he seeks? To determine this issue, I shall take the
reliefs sought by the Claimant seriatim:
A.
Claimant’s first relief is for “A declaration that the termination of
the Claimant’s employment by conduct by the 2nd Defendant, is
wrongful and in breach of the contract of employment with the 1st
Defendant”. I have found under issue one
that by the Defendants’ sale of the 1st Defendant, non-absorption of
the Claimant by 3rd Defendant, and withdrawal of access to his
office and online sites of the Defendants, terminated the Claimant’s
employment, by conduct. The wrongfulness
is only to the extent of none service of a formal letter of termination to the
Claimant. Relief one therefore
succeeds. I so hold.
B.
Relief two is for “payment of the sum of N3,195,105.93 (Three Million, One Hundred and Ninety-Five Thousand,
One Hundred and Five Naira, Ninety-Three Kobo) being terminal benefit due to
the Claimant owing to the wrongful termination of the Claimant’s
employment.” The Claimant argued that
upon his constructive discharge without due process, the 3rd
Defendant instructed him to compute the terminal benefits of all staff
(including himself) and it was done and presented to the 2nd
Defendant(exhibit C6), who responded that there would be no payment of terminal
benefits since staff would be employed by the new owners. From Claimant’s own testimony, it was the 3rd
Defendant that requested for the computation of the terminal benefits; not the
1st and 2nd Defendants.
The 3rd Defendant is no longer a party to these
proceedings. The 1st and 2nd
Defendants have dis-owned the document by saying that the Claimant was not
directed to prepare it. The Claimant has
not established that such instruction was given, by evidence. Further, the documents (exhibits C4 and C6)
do not have any description/heading as to what they are. On the whole, I find exhibits C4 and C6 as
unreliable to establish the total claim of the Claimant.
However, the Claimant states the said
sum to be made up as follows:
1.
Outstanding leave allowances (2018/2019, 45 days
encashment -N988,856.72; 2019/2020, 30 days encashment – N659,237.81, Leave
allowance- N632,868.30
2.
One month salary in lieu of notice N703,187.00
3.
Salary(1/12/2019 - 9/12/2019) N210,956.10
Total N3,195,105.93
Though I see in exhibit C2, page 17
paragraph 6.3 a provision for leave allowance payable as 10% of 75% of staff
annual gross; it does not contain a provision for encashment of leave, as
sought by the Claimant. However, since I
have found that the Defendant by conduct, terminated the Claimant’s employment;
the Claimant is entitled to the one month salary in lieu of the notice the
Defendants were to give him. The
Defendants did not challenge Claimant’s evidence that his salary at the time of
termination was N703,187.00. Though the
Defendants stated that the Claimant is not entitled to the sum of N210,956.10 (Two
Hundred and Ten Thousand, Nine Hundred and Fifty-Six Naira, Ten Kobo) as
alleged salary from 01.12.2019 to 09.12.2019, the Defendants failed to show
that it paid the Claimant’s salary for that period, and failed to tender the
statement of account to show it paid the said pro-rated salary. I find that the Claimant is entitled to the
said sum of N210,956.10. Therefore, only the sums of N703,187.00 plus
210,956.10 (Total = 914,143.10)being one month salary in lieu of notice of
termination, and salary for 1/12/2019 to 9/12/2019, when the Claimant’s
employment is deemed terminated after it became clear the Claimant had no job
to go to. The 1st and 2nd
Defendants are ordered to pay to the Claimant, the sum of 914,143.1(Nine
Hundred and Fourteen Thousand, One Hundred and Forty Three Naira Ten Kobo)
being one month salary in lieu of notice of termination, and salary for
1/12/2019 to 9/12/2019.
C.
Relief three is for “interest on the above sum at the rate of 10% per
annum from 9th December 2019, being the time, the payments became
due, until judgment is entered in this suit”.
This is
a claim for pre-judgment interest. The
law is trite that before a party can claim pre-judgment interest, he has to
plead not only his entitlement to the interest, but the basis of the
entitlement either by statute or contract/agreement between the parties, or
under mercantile custom or under principle of the equity. See Dantama v. Unity Bank Plc (2015)
LPELR-24448(CA). The Claimant has not proved which statute,
custom or principle of equity provides for the pre-judgment interest sought in
this case. The
Claimant has not proved how she became entitled to the percentage interest
claimed. See also Mr. Kurt Severinsen v. Emerging Markets Telecommunication Services Limited [2012] 27 NLLR (Pt. 78) 374 NIC; Mr. Valentine Ikechukwu Chiazor v. Union Bank of Nigeria Plc Suit
No. NICN/LA/122/2014 judgment delivered on 12th July 2016. The relief for pre-judgment interest is declined
D.
Relief four is for “N5,000,000
(Five Million Naira only) general damages for breach of contract and of
unlawful termination of employment”.
From the circumstances of this case, the only breach found is the
failure to give notice of termination, after the conduct of the Defendants brought
the Claimant’s employment to an end; I make no award for general damages;
having awarded the salary in lieu of notice.
E. The terms of this judgment are to be complied
with, not later than 30 days, failure at which interest will accrue at the rate
of 10% per annum.
28. Issue Three – Whether the veil of
incorporation should be lifted to hold the 2nd Defendant jointly
liable in the contract between the Claimant and the 1st Defendant. The Defendants had argued that on the basis
of the doctrine of corporate personality, the 2nd Defendant
cannot be held liable for any obligation the 1st Defendant owes to
the Claimant under the employment
relationship and neither can those obligations be imputed to the 2nd
Defendant. The Defendants however admitted that there are exceptions, even
though submitting that none of those exceptions apply in this case.
29. In New
Nigerian Newspapers Ltd. v. Agbomabini (2013)
LPELR-20741(CA), the Court of Appeal held that:
The Courts do not make a
habit of going behind the facade of corporate personality of a company to hold
the shareholders or directors liable for the acts of the company except in very
rare instances such as where the company has be used as an instrument for
illegality or fraud - Adeyemi vs Lan
& Baker (Nig) Ltd (2000) 7 NWLR (Pt.663) 33, FDB Financial Services Ltd Vs Adesola (2000) 8 NWLR (Pt 688) 170, Mezu Vs Cooperative & Commerce Bank
(Nig) Plc (2013) 3 NWLR (Pt 1340) 188. This was explained by ADEKEYE, JCA
(as he then was) in Vilbeko (Nig) Ltd Vs
Nigerian Deposit Insurance Corporation (2006) 12 NWLR (Pt 994) 280 at 295
F-H thus:
An incorporated limited
liability company is always regarded as a separate and distinct entity from its
shareholders and directors. The consequence of recognizing the separate
personality of a company is to draw the veil of incorporation over the company.
No one is entitled to go behind the veil. This corporate shell shall however be
cracked in the interest of justice. Particularly where the company is used as a
mask or sham by the director to avoid recognition in the eyes of equity, the
court must be ready and willing to open the veil of incorporation to see the
characters behind the company in the interest of justice. Since a statute will
not be allowed to be used as an excuse to justify illegality or fraud, and once
there is clear evidence of fraud or illegality, the veil will be lifted."
Per ABIRU, J.C.A. (Pp. 40-41, Paras. F-E)
30. The Courts have also held that by the theory
of lifting or piercing or going behind the corporate veil, the legislature and
the Courts in exceptional circumstances and where expedient, can unveil or
unmask a company to see the individuals or members behind it - See F.D.B. Financial Services Ltd. v. Adesola
(2000) 8NWLR (pt.668) 170 at 13.
The Defendants gave evidence that the 1st Defendant assets
have been sold but that it remains an existing legal entity; but without
assets. As stated in the case of New
Nigerian Newspapers Ltd. v. Agbomabini cited above, “this corporate shell shall
however be cracked in the interest of justice. Particularly where the company
is used as a mask or sham by the director to avoid recognition in the eyes of
equity, the Court must be ready and willing to open the veil of incorporation
to see the characters behind the company in the interest of justice.
31. It is my view that justice cannot be done in
this case, without piercing through the veil of incorporation of the 1st
Defendant, to see the character(s) who acted on its behalf, in relation to the
case at hand. I therefore hereby pierce
the veil of incorporation of the Defendants to see who acted on behalf of the
company in respect of the facts constituting the present case. From exhibits C5, C8 (emails of 30th
November 2019 and 17th January 2020), C9( which shows the 2nd
Defendant as sole shareholder(99.9% shares)), C10, and C13; I am convinced that
the 2nd Defendant is the sole directing mind of the 1st
Defendant and should be held liable to the Claimant; alongside the 1st Defendant. This Judgment is entered against the 1st
and 2nd Defendants; jointly and severally. Cost is set at N200,000.00 against the 1st
and 2nd Defendants.
Judgment is entered accordingly.
…………………………………….
Hon. Justice Elizabeth A. Oji PhD
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